Company Law Session 1: Simple Example Formation of Profit Generating Activity

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What is one of the purposes of company law?

Maximization of employee benefits

Ensuring all corporate transactions are beneficial to stakeholders (correct)

Minimizing shareholder wealth

Promoting conflicts between managers and shareholders

In Dodge v. Ford case, who were the plaintiffs?

John and Horace Dodge (correct)

Controlling shareholders

Henry Ford

Non-controlling shareholders

What was the relief sought by the plaintiffs in the Dodge v. Ford case?

Enjoin the construction of a manufacturing facility

Require a dividend of at least 90% of cash surplus

Increase the authority of directors

Enjoin the use of cash for a specific purpose (correct)

Based on the text, what is the shareholders' wealth maximization rule primarily aiming at?

Maximizing shareholders’ financial return Signup and view all the answers

Why did Dodge v. Ford case revolve around the declaration of dividends?

To ensure fair distribution of profits Signup and view all the answers

What is one of the ways company law contributes to reducing conflicts among constituencies?

Facilitating coordination between participants Signup and view all the answers

What legal mechanisms can Alice, Bart, and Chris use to form a profit generating activity without creating a company?

Alice can license the intellectual property to Bart Signup and view all the answers

Who owns a manufacturing facility in the provided example?

Bart Signup and view all the answers

What role does Alice play in ABC Corp?

Chairman & CEO Signup and view all the answers

What is the primary purpose of company law?

To provide entrepreneurs with a legal structure for business pursuit Signup and view all the answers

In the context of the text, what does 'the box' symbolize?

The legal rights and liabilities in company law Signup and view all the answers

'C loans cash to A who enters into manufacturing contract with B' is an alternative mechanism mentioned in the text. What does this mechanism suggest?

Financial support for manufacturing without forming a company Signup and view all the answers

What did the trial court do regarding the dividend?

Ordered a $19 million dividend Signup and view all the answers

According to Dodges' argument, why did they consider Ford's policy reckless?

Ford was expanding the business despite uncertain conditions Signup and view all the answers

What is Henry Ford's ambition according to his response?

To invest profits back into the business Signup and view all the answers

In Ford's response, who does he mention as benefiting from the industrial system?

Employees Signup and view all the answers

According to Ford, where does he put the majority of the profits?

Back into the business Signup and view all the answers

In questioning sustainability, Ford asks whose interests the corporation serves. What is not among the options he listed?

Shareholders Signup and view all the answers

Company Law Session 1: Simple Example Formation of Profit Generating Activity

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