True/False Questions

Mark the following statements either T (True) or F (False).

1. The corporation has unlimited liability for its corporate obligations. ()

2. While the corporate officers may be subject to criminal liability, the corporation is not subject to criminal liability. ()

3. Shareholders of publicly-held corporations have a greater voice in management of the corporation than do shareholders of closely-held corporations. ()

4. Professionals are allowed to incorporate. ()

5. For small corporations, the advantage of incorporation may be illusory. ()

6. The corporation must be in existence during the promotional stage. ()

7. The corporation, upon coming into existence, is not immediately liable upon promoters contracts. (

Today few corporate acts are ultra vires. ()

8. A foreign corporation must obtain a certificate of authority to use the courts of the state in which it is doing business as a foreign corporation. (

9.Piercing the corporate veil provides limited liability to persons who do business as a corporation without complying with corporate formalities. ()

10. A de jure corporation is one formed in compliance with all mandatory state requirements. (

11. Courts are more reluctant to pierce the corporate veil in contract cases than in tort cases. ()

12. In the eyes of the law, a corporation is considered a natural person. ()

13. In the corporate form of business, it is the shareholders who actually manage the affairs of the corporation. ()

14. Joann invests $18,000 in the Wave Corporation in exchange for 1,000 shares of common stock. Unless otherwise agreed, the maximum liability exposure that Joann has in the Wave Corporation is $18,000. ()

15. As a legal entity, a corporation can own property and can enter into contracts; but, only its shareholders, not the corporation itself, can be sued. ()

16. As a general rule, professional corporations require that all shareholders be professionals licensed to conduct the business of the corporations. ()

17 Unlike most privately-held corporation shareholders, professional corporations shareholders are personally liable to third parties for torts committed in the conduct of their professional activities. ()

18 A nonprofit corporation is generally classified as a public corporation. ()

19 An S, but not a C corporation is subject to double taxation. (

20. A shareholder in a C corporation can only be subject to the effects of double taxation if some form of dividend distribution is made by the corporation to its shareholders. (

21 Today, most corporations are formed or created by compliance with Federal statutes and enabling acts. (

22. A C corporation can have no more than 75 shareholders. ()

23. Incorporators who file articles of incorporation are seeking a certificate of incorporation, or charter, from a particular state. ()

24. Virtually all modern state incorporation statues limit the duration of corporate existence. (

25. Bylaws are a set of rules that govern the corporations affairs with external, or third parties. (

26. Since modern state corporate statutes authorize extremely broad general purposes clauses, it is fairly unlikely that any corporations activities will be found ultra vires. ()

27. A corporation formed in Wisconsin is considered a foreign corporation when doing business in Ohio. ()

28. Before a corporation can conduct business outside of the state where it is incorporated, it must first obtain articles of incorporation from each state in which it would be considered foreign. ()

29. Despite the fact that an Iowa corporation is conducting business in Nevada without a license, it can still be sued in the courts of Nevada. (

30 All of the contracts entered by a Kentucky corporation while conducting business in Florida without a license are legally void. ()

31. As a general rule, corporation shareholders can never have personal liability for the debts and obligations of the corporation in which they own shares. ()

32. As a general rule, before a corporation can become liable for a promoters contract it must first somehow, someway, indicate its consent to be bound by any preincorporation transactions on its behalf. (

33. Co-promoters are generally considered partners for purposes of imposing fiduciary duties and responsibilities. (

34. The shareholders of a de jure corporation are generally insulated from personal liability for the debts and obligations of the corporation. (

35. Piercing the corporate veil is a common liability problem for shareholders of publicly-held corporations. ()

36 A closely-held corporation cannot have more than ten shareholders. ()

37. Federal income considerations often are determinative in choice of organizational form. ()

38. A promoter always has the power to bind a corporation. ()

39. For tax purposes, a corporation is subject to double taxation. ()

40. A corporation that has failed to meet one or more of the legal state requirements for incorporation will be known as a de jure corporation. ()