Reference no: EM133997996

Question

1. The directors of WorldCorp, a Florida corporation, are considering issuing 10,000 additional shares of common stock. After considering numerous reports and expert valuations, the directors determine that the issuance would benefit the corporation; however, before issuing the shares, the directors bring the matter up for a shareholder vote at WorldCorp's regular annual meeting.

Which statement below is most correct based on the facts above?

a. Bringing the stock issuance up for a shareholder vote is improper; directors alone may authorize stock issuances.

b. The shareholder vote is proper because shareholders retain the right to vote on stock issuances by default.

c. While directors retain the right to issue stock by default, the shareholder vote here is proper if authorized in WorldCorp's articles of incorporation.

c. While directors retain the right to issue stock by default, the shareholder vote here is proper if authorized in WorldCorp's bylaws or by simple majority approval of the directors.

2. Layla and Robert have co-developed an AI technology for application in the musical instruments manufacturing and industries. The technology automatically adjusts the sonic character of a recorded instrument to match the sonic character of another recording. For example, a user of the technology could instruct the AI platform to make a recorded guitar track sound like it was recorded using Jimi Hendrix's instruments and amplifiers.

On May 1, 2024, Layla and Robert file articles of incorporation with the Florida Department of State for their new enterprise, which they name GuitarAI, Inc. On May 3, 2024, Robert signed a contract with Sun Media, a video production company, to film several short videos to market the new technology on social media and YouTube. Robert signed the Contract as "Robert, Founder and Chief Marketing Officer, GuitarAI."

On May 4, 2024, Layla receives a notice from the Department of State stating that the May 1 filing was defective for containing an invalid or illegible signature. On May 5, 2024, Layla and Robert cured the defective filing.

On May 7, 2024, Robert phoned Sun Media and said: "We have a problem. Back when we signed our contract, unbeknownst to me, GuitarAI didn't actually exist. So, technically the contract is void. Sorry, but GuitarAI won't be moving forward."

If the dispute remains unresolved and Sun Media sues Robert individually, does Robert have a potential defense?

a. Yes: de facto corporation.

b. Yes: corporation by estoppel.

c. Yes: both (A) and (B)

3. Acme Corp.'s articles of incorporation authorize the issuance of the following three classes of shares:

Class A Common
Economic rights: entitled to receive the net assets of the corporation upon liquidation.
Voting rights: none.
Class B Common
Economic rights: none, other than the right to transfer.
Voting rights: none.
Preferred
Economic rights: 8% annual dividend.
Voting rights: none.

Why is the authorization improper?

a. The authorization is improper because there is no class of shares with voting rights.

b. The authorization is improper because Class B Common shares have no economic rights, other than the right to transfer.

c. The authorization is improper because the Preferred shares have no voting rights.

d. The authorization is improper because Class B Common have no economic rights, other than the right to transfer..

4. NewCo's articles of incorporation authorize the issuance of up to 100,000 shares of $1 par value stock. NewCo issues 10,000 shares to Ali in exchange for 1,500 shares of Peach, Inc. stock. Was the issuance to Ali proper under Florida law? Choose the best answer.

a. Yes, because the 1,500 shares of Peach, Inc. stock constitute "any tangible benefit" to NewCo.

b. Yes, if NewCo's board of directors determined that the the 1,500 Peach, Inc. shares were valued at $10,000 or more and were thus "adequate" consideration.

c. No, because a corporation may not acquire shares in another corporation.

d. No, because the only appropriate consideration here is cash since the NewCo shares have a par value of $1.