Which of the following statements is incorrect? New term for the corporation in the revised corporation code will now be considered perpetual The holders of ordinary and preference shares elect the corporation's board of directors The corporation cannot issue shares more than its authorized number of shares The trust fund doctrine provides that subscriptions to the capital stock of a corporation constitute a fund to which creditors have a right to look for the satisfaction of their claims

Which of the following statements is incorrect? New term for the corporation in the revised corporation code will now be considered perpetual The holders of ordinary and preference shares elect the corporation's board of directors The corporation cannot issue shares more than its authorized number of shares The trust fund doctrine provides that subscriptions to the capital stock of a corporation constitute a fund to which creditors have a right to look for the satisfaction of their claims

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 12MCQ

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The following are the characteristics of a close corporation, except: a. Any action by the directors of a close corporation without a meeting shall nevertheless be deemed valid. b. Pre-emptive right does not extend to all stock issuances. c. Deadlock in the board is settled by the SEC upon the written petition by any stockholder. d. A stockholder may withdraw and avail of his right of appraisal.
Whereas, a decrease of the authorized capital stock will not be approved by the SEC if the effect is to prejudice the rights of the creditors, and yet no such qualification is provided for under the Corporation Code when it comes to the increase in authorized capital stock, because – It is an application of the coverage of the trust fund that always makes an increase of authorized capital stock favorable or non-prejudicial to the creditors of the corporation. It is presumed that creditors of the corporation will always be happy with the increased of its authorized capital stock. No appraisal right is triggered by an increase in the authorized capital stock of the corporation. Creditors of the corporation, not being within the intra-corporate relationship, have no standing on matters that pertain to the capital structure of the corporation.
Each of the incorporators of stock corporation must own or be a subscriber of at least one (1) share of the capital stock of the corporation. TRUE FALSE The corporate powers of a corporation shall be exercised by the stockholders. TRUE FALSE The President of the corporation may or may not be a director. TRUE FALSE The Treasurer of a corporation must be a member of the Board of Directors. TRUE FALSE A majority of the members of the Board of Directors as fixed in the Articles of Incorporation shall constitute a quorum, and every decision of at least a majority of the directors present at the meeting shall be valid as a corporate act. TRUE FALSE Directors can attend and vote by proxy at board meetings. TRUE FALSE Persons convicted by final judgment of an offense punishable by imprisonment for more than 6 years, or a violation of the corporation code, committed within 5 years prior to the date of their election or appointment are not qualified as directors or officers of any…
Which of the following is not a power held by a corporation's shareholders? removal of corporate officers approval of changes in the structure of the corporation veto of the sale of substantial corporate assets election of the corporation's board of directors
Which of the following statement is incorrect? a Cumulative voting is said to be of benefit to minority shareholders because they have the option of placing all of their votes toward one seat during elections. b Callable bond issuers exercise their option to repurchase the bond issue at a predetermined price (i.e., call price) in low interest environment. c A standard arrangement for the orderly retirement of long-term debt calls for the corporation to make regular payments into an irrevocable trustee fund. d A rights offer has the lower issuance costs than a cash offer given a similar amount of fund raising. e Assuming everything else is constant, the price of a stock after the ex-rights date should decrease since the stockholder is losing an option.
S1 A Public Corporation is one formed for the government of a portion of the state. S2 All incorporators are subscribers but a subscriber need not be an incorporator. a. Both statements are true b. Both statements are false c. One statement is true, and the other one is false S1-Shareholders elect board of directors which appoints the management of the corporation. S2 -The Par value shares constitute the legal capital of a corporation. a. Both statements are true b. Both statements are false c. One statement is true, and the other one is false
Which of the following statements is CORRECT? A The stock of publicly owned companies does not need to be registered with and reported to a regulatory agency such as the SEC. B When a corporation's shares are owned by a few individuals, we say that the firm is publicly traded. C "Going public" establishes a firm's true intrinsic value and ensures that a liquid market will always exist for the firm's shares. D When stock in a closely held corporation is offered to the public for the first time, the transaction is called "going public, or an IPO," and the market for such stock is called the new issue or IPO market. E If a firm goes public, it will always raise additional new capital for the firm itself.
When a certificate of stock is issued for shares whose subscription is not fully paid, then – a) the certificates are deemed null and void for being in violation of express prohibition of the Corporation Code. b) the directors and officers who allowed such issuance of the certificate shall be liable to the corporation for the balance of the subscription that remains unpaid. c) the shares are conclusively deemed fully paid as to every due holder in good faith of the certificate of stock. d) the registered stockholder shall no longer be liable for the unpaid portion of the subscription.
Which statement pertaining to provisions in the Companies Act 71 of 2018 is true? Select one: a. No company is allowed to provide financial assistance to acquire its own shares. b. Only public companies can provide financial assistance to acquire their own shares. c. Only private companies can provide financial assistance to acquire their own shares. d. Private companies are free to provide financial assistance to acquire their own shares. Generally public companies are prohibited from providing such assistance, but can do so in limited circumstances.
Direction: Write T if the statement is correct and F if the statement is incorrect. On the space provided, explain using the concepts discussed why your answer to a statement is T or F. 1. A corporation can be formed by mere agreement among shareholders. 2. Shareholders are not liable to corporate obligations in excess of their contribution. 3. Authority of the corporation to operate has to be granted by the state. 4. Death of a shareholder will dissolve the corporation. 5. Shares cannot be transferred without the consent of the other shareholders. 6. All incorporators are subscribers but a subscriber need not be an incorporator. 7. The ultimate control of the corporation rests with the board of directors. 8. Shareholders can transact business on behalf of the corporation. 9. All incorporators are shareholders but not all shareholders are incorporators. 10. In a corporation, minority shareholders are compliant to the wishes of the majority.
1.Which of the following statements is true concerning all types of tax-free corporate reorganizations? Assets are transferred from one corporation to another. Stock is exchanged with shareholders. Liabilities that are assumed when cash is also used as consideration will be treated as boot. Corporations and shareholders involved in the reorganization will recognize gains but not losses. None of the above statements is true.
A stockholder dissatisfied with the management of the corporation done by the Board of Directors surrenders his certificate of stocks and demands the return of the subscription price paid by him. Can he rightfully do this? Explain.