Chapter 31, Problem 7Q

The stock in Hotel Management, Inc., a hotel management corporation, was divided equally between two families. For several years, the two families had been unable to agree on or cooperate in the management of the corporation. As a result, no meeting of shareholders or directors had been held for five years. There had been no withdrawal of profits for five years, and last year the hotel operated at a loss. Although the corporation was not insolvent, such a state was imminent because the business was poorly managed and its properties were in need of repair. As a result, the owners of half the stock brought an action in equity for dissolution of the corporation. Will they succeed? Explain.

BZ” is a recreational club which was organized to operate golf course for its members with an original authorized capital stock of P100M. The articles of incorporation nor the by laws did not provide for the distribution of dividends although there is a provision that after dissolution, the assets shall be given to a charitable corporation. Which of the following statement is true based on existing This is a stock corporation since its articles of incorporation and by-laws are silent, it is presumed that it can declare dividends. This is a non-stock corporation because the articles of incorporation did not provide for the distribution of dividends. The stockholders or members must amend the articles of incorporation and state clearly whether the corporation is a stock corporation or a non-stock corporation. This is a non-stock corporation because the assets after dissolution are to be given to a charitable institution.

Smith, a shareholder, filed suit against the board of directors of a corporation in which he had owned stock. Smith claimed that he and other shareholders had not received top dollar for their shares when their corporation had merged with another. Consequently, they sought either a reversal of the merger or payment from the directors to make up for their losses. The directors, Smith argued, had violated their duty of due care because they based their decision on a 20-minute speech by the CEO. Also, the directors had not even looked at the merger documents, let alone studied them. Furthermore, the directors had not sought any independent evaluation by outside experts. For their part, the directors argued that because their decision was made in good faith and was legal, they were protected by the business judgment rule. Were the directors correct?

Bernard Koch was president of United Corporation, a closely held corporation. Koch, James Trent, and Henry Phillips made up the three-person board of directors. At a meeting of the board, Trent was elected president, replacing Koch. At the same meeting, Trent attempted to have the salary of the president increased. He was unable to obtain board approval of the increase because, although Phillips voted for the increase, Koch voted against it. Trent was disqualified from voting by the corporation’s charter. As a result, the directors, by a two-to-one vote, amended the bylaws to provide for the appointment of an executive committee composed of three reputable businesspersons to pass upon and fix all matters of salary for employees of the corporation. Subsequently, the executive committee, consisting of Jane Jones, James Black, and William Johnson, increased the salary of the president. Will Koch succeed in an appropriate action against the corporation, Trent, and Phillips to enjoin them…

art IScenario IAgroVate, a Delaware corporation, is the target of a bid from Bijoux. Bijoux had originally approached AgroVate’s board with an offer to buy the company, but AgroVate turned down the offer. Now, in newspaper ads and direct mail to shareholders, Bijoux has initiated a tender offer to shareholders well above market price.The Board of Directors of AgroVate consists of the three Maxxo brothers, Happy, Dopey and Sleepy, as well as eight other directors who are not related to the Marx Brothers. AgroVate’s bylaws provide that eight directors constitute a quorum.Manly Pearson, the president of Bijoux, wants to take control of AgroVate and merge it with Bijoux. He plans to replace the current board and sell off AgroVate’s widget finishing division, which he thinks is dragging the company down. Pearson has no interest in the widget business; Bijoux makes service uniforms; Pearson simply sees the takeover as a business…

Compare the liability of the owners of partnerships, sole proprietorship, and corporations. Please explain

45) What is a disadvantage of partnerships over sole proprietorships?    A. In partnerships, profits have to be shared, whereas in sole proprietorships all profits belong exclusively to the owner.  B. Unlike sole proprietorships, partnerships do not face any regulatory controls that affect their activities.  C. In partnerships, all owners have unlimited liability, whereas in sole proprietorships they have limited liability.  D. Unlike a sole proprietorship, a partnership is terminated when a partner dies or withdraws.  E. In sole proprietorships, the owners have access to more funds than in partnerships.

Anthony and Karen were partners doing business as the Petite Garment Company. Leroy owned a dye plant that did much of the processing for the company. Anthony and Karen decided to offer Leroy an interest in their company, in consideration for which Leroy would contribute his dye plant to the partnership. Leroy accepted the offer and was duly admitted as a partner. At the time he was admitted as a partner, Leroy did not know that the partnership was on the verge of insolvency. About three months after Leroy was admitted to the partnership, a textile firm obtained a judgment against the partnership in the amount of $50,000. This debt represented an unpaid balance that had existed before Leroy was admitted as a partner.The textile firm brought an action to subject the partnership property, including the dye plant, to the satisfaction of its judgment. The complaint also requested that, in the event the judgment was unsatisfied by sale of the partnership property, Leroy’s home be sold and…

Describe one the conditions that must be satisfied before a derivative suit can be instituted. A. The company is under the control of the majority shareholders/directors. B. A wrong must not have been done to the company by the majority shareholders. C. Any damages awarded will not go to the company but to plaintiff shareholder. D. An individual shareholder or minority decides to sue the wrongdoers for or on behalf of company.