Thanks in large part to your sage advice, brothers Paul and John and their third partner, George, have successfully launched their surfwear business and have opened a very successful storefront in Los Angeles. They have successfully incorporated their business as Fantastically Innovative Surfing, Inc. and have run the corporation for almost two years now. They have made more than $200,000 in net profit in year one and more than $350,000 in net profit in year two.

In the beginning days of the company, this business was simply a side job for all three individuals. As their business has grown more successful, however, they have realized that their surfwear business could be huge, thanks to Paul's sage business acumen, John's innovative surfwear technology, and George's excellent experience and skills in sales.

Paul has come to you with the following questions and concerns regarding Fantastically Innovating Surfing, Inc. Your responses to each of the following questions should be approximately one to two paragraphs. You should substantiate your responses by providing any appropriate references to the cases and model statutes that we are studying in our course; no outside references are required. You may feel free to incorporate additional facts and assumptions into the hypothetical scenario, as long as you clearly note them.

1.During the same month, George has indicated he would like to aggressively expand and open up a second storefront in San Diego and a third store front in Santa Monica at the same time. John has serious concerns and thinks that the focus should solely be on slowly expanding the Los Angeles location. Paul does not have particularly strong views, but this disagreement between George and John has become more intense in recent years.

The corporation is about to hold its annual shareholders meeting with Paul, John, and George as the sole shareholders. They are also the only three directors of the corporation, though they are also contemplating adding two additional directors: Roberto, who is one of John's best friends and a software engineer who has helped the corporation with its website; and Denise, who is a local surfer, is an avid social media advocate for the corporation, and has close ties to the surf community in Santa Monica. Paul has serious reservations about adding any new directors at this time.

What considerations do the shareholders need to weigh at the shareholders meeting? What types of votes do they need to hold? What documentation do they need to prepare to thoroughly document their decision? What steps do they need to take to change the number of board members on the board?

2.Right after the shareholders' meeting, Chung, a wealthy angel investor and part-time surfer, approaches Paul about investing $1 million in the corporation on the condition that he receive a board seat. He has no prior personal or professional connections with Paul, John, or George, but George is excited about this potential infusion of capital and is thinking about giving up his board seat and having Chung take his place.

What questions should they ask Chung in order to determine whether he would be an appropriate fit for the Board of Directors? Should George resign from the board? If he does want to resign, what steps would need to be taken?

3.Three years later, Paul has returned to you with more questions and concerns. Now, the shareholders of the corporation consist of Paul, John, George, Roberto, Denise, and Chung. Paul, John, and George each own 1/4th of the corporation and the remaining 1/4th of the corporation was equally divided among Roberto, Denise, and Chung. All six also sit on the board; Paul is the CEO, John is the COO, and George is the CMO. By this time, the corporation has turned net profit of $3 million in the most recent fiscal year, and it is poised to double its profit in the upcoming year.

The corporation caught the eye of Surfs Up, Inc., a competitor, who approached George and offered $20 per share, valuing the corporation at $20 million. That same month, John's sister Andrea, a major shareholder in a large retail conglomerate, The Clothes Conglomerate, indicated that The Clothes Conglomerate would like to offer $25 per share, valuing the corporation at $25 million. Andrea texted to John that the Clothes Conglomerate did not trust in Paul's leadership, however, and that it would be "their little secret" that the Clothes Conglomerate would terminate Paul as CEO after the acquisition and replace him with John, to whom they would give a $1 million bonus if the transaction was successful.

Both George and John took their respective offers to the Board of Directors. The Board of Directors hired a local financial analyst to weigh the competing offers. In the meantime, Surfs Up, Inc. increased its offer to $30 per share, and The Clothes Conglomerate promptly matched the offer. The financial analyst studied the question for a week and recommended to the board to move forward with The Clothes Conglomerate, largely because they had more financial resources to grow the company. The financial analyst recommended that no additional offers be solicited, as both offers could go away soon. Denise and Chung expressed that they were "extremely uncomfortable" with not soliciting other offers, as they believed that the corporation could be worth as much as $50 per share.

During a contentious debate over which offer was better, John (who knew George preferred The Clothes Conglomerate already) pulled Roberto aside and indicated that if he voted in favor of The Clothes Conglomerate, he would allow Roberto to live in his large house in Malibu rent free for a year. John also indicated that The Clothes Conglomerate would have more resources to make the corporation more successful and that it would be detrimental to the corporation to have a 50-50 tie in the shareholder vote.

When the shareholders held a vote, John, George and Roberto (voting 58.3% of the shares) voted to approve of moving forward with the Clothes Conglomerate acquisition, while Paul, Denise and Chung (voting 41.7% of the shares) voted in favor of moving forward with Surfs Up, Inc.

Paul, Denise and Chung initiate a shareholder derivative lawsuit.

What issues do you think existing with respect to fiduciaries duties? What do you think the majority shareholders would argue, and what do you think the minority shareholders who initiated the derivate lawsuit would argue? Which party do you think will ultimately prevail? If the lawsuit is successful, what should the company now do?

Question 3 Some researchers who utilise Legitimacy Theory posit that organisations will attempt to operate within the terms of their 'social contract". What is a social contract? Question 4 In 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, 'market forces' would be relied upon to encourage companies to do the 'right thing' (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations' products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the 'right thing' even in the absence of legislation). You are required to explain the decision of the government that no specific regulation be introduced from the perspective of: 1. Public Interest Theory 2. Capture Theory 3. Economic Interest Group Theory of regulation.Welcome to Question 21 The main components of government revenues are Not yet answered Select one: Marked out of 1 00 a. personal income taxes, corporate income taxes, indirect taxes, and investment and other income. P Flag question O b. transfer payments, investment income, and indirect taxes. c. debt interest, corporate income taxes, and income taxes. O d. corporate income taxes, indirect taxes, and transfer payments. O'e. debt interest, expenditures on goods and services, and income taxes. Question 22 The effort atQuestion Completion Status: Attach File Browse My Computer Browse Content Collection QUESTION 32 The following facts relate to Krung Thep Corporation: 15 points Save 1. Deferred tax liability, January 1, 2015, $40,000 2. Deferred tax asset, January 1, 2015, $0 3. Taxable income for 2015, $115,000 4. Pretax financial income for 2015, $200,000 5. Cumulative temporary difference at December 31, 2015, giving rise to future taxable amounts, $220,000 6. Cumulative temporary difference at December 31, 2015, giving rise to future deductible amounts, $35, 000 7. Tax rate for all years, 40% 8. The company is expected to operate profitably in the future. Instructions: a Compute income taxes payable for 2015. b. Prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2015. Prepare the income tax expense section of the income statement for 2015, beginning with the line "income before income taxes." Browse My Computer Browse Content Collection Attach FileQuestion 4 Which of the following paycheck withholdings puts money into a retirement investment fund the you will manage? Social Security O Medicare 401(k) contribution Federal income taxes Question 5QUESTION 6 Albert entered into a contract under the name of one of his corporations. After consulting with his accountant regarding tax implications, he asked, and the other party agreed, to change the name of the company in that contract. What has transpired with respect to the contract between these parties? 0 a. amendment 0 b. novation O c. substitution 0 d. assignment QUESTION 7 Although Maybelle's insurance excluded coverage for jewelry loss, her insurer mistakenly sent her a cheque to compensate her for the loss of an expensive piece of jewelry. What legal doctrine might the insurer use to recover the money that was mistakenly paid to Maybelle? O a. misrepresentation O b. frustration O c. the duty to mitigate 0 d. unjust enrichment