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Unformatted text preview: Management C31 Midterm Examination, Fall 2008 October 21, 2008 Professor Hugh Laurence You will have 1 hour, 50 minutes during which to write this examination, beginning at 5:10 sharp and ending at 7 p.m. It will be marked out of 100. There is one question. Through the Looking Glass How curious thought Alice to herself as she melted through the mirror and landed in Looking Glass Land. Everything seemed turned front to back and Alice is horribly confused. Alice discovers she is the lead guitarist and singer in a rock band, Alice and the Queen and is scheduled to give several concerts in about a years time to huge Looking Glass audiences all the tickets have been sold out. The band needs to practice very badly. Several members of the band have appeared in Looking Glass Land along with her. Tweedledee is Alices rhythm guitarist, Tweedledum is her drummer and the White Queen plays keyboards. Alice has no business sense at all she just sings mightily at the top of her lungs and writes hit songs. The White Queen is the one with business smarts after all, she is over 70 years old and has lived through a lot. The White Queen has agreed to run the business for Alice and the others. The White Queen is also splendidly wealthy in Looking Glass Land, and so she agrees to provide almost all of the start-up capital for the new business. Both Alice and the White Queen would play an active role in the business, but as Alice is the creative heart of the whole enterprise Alice would be free from management. Alice discovers she has some Looking Glass money, and decides to invest that in the business as well. Everything in Looking Glass Land is done very legally. The White Queen recommends incorporating the business to protect us if we get sued. Alice is not sure why she would be sued, but agrees. So the White Queen incorporates the business under the name of Alice and the Queen Inc. (A&Q). As seed capital for the business, the White Queen pays $150,000 in exchange for 150,000 common shares of A&Q. Alice pays the $20,000 she found in her pocket and receives 20,000 common shares of A&Q. Tweedledee and Tweedledum each pay $25,000 for 25,000 common shares of A&Q. The White Queen then drafts a shareholder resolution appointing the White Queen, Tweedledee and Tweedledum as the directors of A&Q. All the shareholders sign the resolution. The directors then sign a resolution appointing the White Queen as president of A&Q and Tweedledee and Tweedledum as co-vice presidents. Finally the White Queen drafts by- laws that require all contracts and financial commitments of A&Q to be pre-approved by a majority of the directors and signed by at least two directors. The White Queen and Tweedledee approve the new bylaws as shareholders, Alice and Tweedledum having gone off to practice. NOTE: no specific issues arise here, but there are some important facts. White Queen controls A&Q, having 68% of the shares. This means WQ can pass ANY...
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This note was uploaded on 05/05/2011 for the course MGT C31 taught by Professor Rybak during the Winter '11 term at University of Toronto- Toronto.
- Winter '11