Darren Troll, CEO of Cash Cow Incorporated (CCI) brought CCI’s two Vice Presidents, John Quick and Dirk Driven, into his office to unveil his new plan for a CCI amusement park, called FUN-A-MANIA-USA (FAMUSA). It was to be located outside Washington D.C. and its design was to be based on the design of D.C., itself. He had pitched his idea to the Board of Directors, but it was not approved. However, Troll was confident that the project would be a cash cow. He felt sure that once the Board saw the project succeed, they would approve the 3.7 million dollar expenditure.
In Troll’s mind, the key was to get the project up and running before the next Board meeting some 11 months down the road. He assigns each VP tasks and tells them that this is their number one priority. John Quick, known for his fast work, is first up. He is assigned the task of finding the money to support the project from CCI’s budget and to set up accounts for a new separate corporation named Fun-A-Mania-USA, Inc. Quick is also expected to set up the corporation. Troll tells Quick that he has until the next day, Friday, to get the money and accounts in place. Troll emphasizes to Quick and Driven that everything has to be in the name of the new company because he doesn’t want the Board to get wind of things until they are all in place. “Think of it as a surprise gift for them,” he said. Troll then turned to Quick and said, “Your job is to find the site, buy the land, and construct the amusement park. You have 10 months to get the job done.” Both men roll their eyes as they leave the office. The deadline is impossible.
John had one last thing to do before he could go home for the day. He had to get the corporation for FAMUSA formed. Normally, he would have gotten legal to handle this, but they had gone home for the evening. He would just take one of the corporate books from the shelf and scan the documents into the computer. He would edit the existing name and put Fun-A-Mania-USA in its place. He names Troll, Driven and himself the shareholders and Board of Directors with the thought that this can changed later to CII when the Board approves the park plan. He had accomplished the job Troll gave him in one day.
The Board of Directors, now very much aware of FAMUSA plan, and not too happy, come to you for advice. They want your legal opinion on the following questions.