You Have Been Asked by Two Fellow Graduates to Join

question 149

Multiple Choice

You have been asked by two fellow graduates to join them in incorporating a closely held corporation that would commence a consulting business.One was in your class,so you know him quite well,but the other is graduating from a different school.You have been discussing the law to review the protection it gives you.Read each of the following statements separately and indicate which is true.

• A)If you have pre-emptive rights and the directors decide to issue a new allotment of shares,the corporation must offer you a portion of the new issue to allow you to keep your proportional share of the corporation.
• B)A shareholder's agreement allows shareholders and not officers to manage the corporation.
• C)As a shareholder,you will have the right to vote for the officers of the corporation.
• D)If you were voted out as a director by the others,who could show that it was in the best interest of the corporation,you could sell your shares to any interested buyer without interference from the other directors.
• E)If you each take one-third of the first allotment of the shares,you will necessarily be a minority shareholder,and have no voting rights in electing the directors of the corporation.

---

Definitions:

Full-Service

Pertaining to businesses or services that offer a comprehensive range of solutions or amenities to their customers, leaving no need unaddressed.

Limited-Service

Refers to businesses or offerings that provide a selective range of services as opposed to comprehensive, full-service options.

Merchant Wholesalers

Businesses that buy goods in large quantities from producers, store them, and then resell them to retailers or other businesses.

Wheel of Retailing

A theory that describes how retail outlets evolve over time, starting from low-end, gradually upscaling, and potentially becoming more conventional or full-service establishments.