Three Classmates Incorporated About a Week After Graduation

question 100

Multiple Choice

Three classmates incorporated about a week after graduation. The authorized capital was 500,000 common no-par-value shares. Each took one share; each was a director. If the directors decide to issue more shares from the treasury to raise more capital, which of the following provisions ensures that they keep their proportionate holdings?

• A) Preemptive right provision
• B) Relief-from-oppression provision
• C) Derivative-action provision
• D) Indoor-management rule
• E) Dissent procedure

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Definitions:

Acid

A substance that can donate a hydrogen ion (H+) and usually has a sour taste.

Base

A substance that can accept hydrogen ions (protons) or more generally, donate a pair of valence electrons.

Saponification Reaction

A chemical reaction in which fats or oils react with an alkali to produce soap and glycerol.

Animal Fats

Natural esters derived from fatty acids and glycerol, commonly found in tissues of animals.