CLA/CP Business and Corporate Law Questions and Answers Flashcards
6 cards from real CLA/CP Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CLA/CP Business and Corporate Law Questions and Answers flashcards as text
Under the doctrine of ultra vires, what happens when a corporation acts beyond the scope of its stated corporate purposes?
Answer: Modern statutes generally allow shareholders, the corporation, or the state to challenge the act
Under modern corporate law, ultra vires acts are not automatically void but may be challenged by shareholders, the corporation in a proceeding against officers, or the state in a dissolution action.
Which type of business entity provides pass-through taxation while also offering limited liability to all of its owners?
Answer: Limited liability company (LLC)
An LLC combines pass-through taxation, where income is taxed only at the member level, with limited liability protection for all members.
What is the primary purpose of a corporate resolution?
Answer: To formally document decisions made by the board of directors or shareholders
A corporate resolution is a formal record of a decision authorized by the board of directors or shareholders at a properly convened meeting.
In a merger, what generally happens to the liabilities of the absorbed corporation?
Answer: The surviving corporation assumes the liabilities of the absorbed corporation
In a statutory merger, the surviving corporation succeeds to all rights and assumes all liabilities of the absorbed corporation by operation of law.
Which remedy allows a minority shareholder to bring a lawsuit on behalf of the corporation when the board of directors refuses to act?
Answer: Derivative action
A derivative action permits a shareholder to sue on the corporation's behalf to enforce a corporate right when the board wrongfully refuses to pursue the claim.
What is the legal significance of piercing the corporate veil?
Answer: It permits courts to hold shareholders personally liable for corporate obligations
Piercing the corporate veil is an equitable remedy where courts disregard the corporate entity and hold shareholders personally liable, typically when the corporate form has been abused.