FL Bar Business Entities

Question 1

Under Florida corporate law, the business judgment rule protects directors from liability for business decisions made in good faith, with due care, and:

Accepted Answer

In the honest belief that the decision was in the best interests of the corporation

Answer

For personal financial gain

Answer

Without shareholder approval

Answer

Based on incomplete information

Question 2

Piercing the corporate veil to hold shareholders personally liable requires proof that the corporate form was used to:

Accepted Answer

Perpetuate fraud, promote injustice, or where the corporation was a mere instrumentality of the shareholder

Answer

Limit shareholder liability

Answer

Distribute dividends

Answer

Elect directors

Question 3

In a general partnership, each partner is liable for partnership debts:

Accepted Answer

Jointly and severally with all other partners

Answer

Only up to their capital contribution

Answer

Only for debts they personally authorized

Answer

Only if they are a managing partner

Question 4

A Florida LLC member's interest in the LLC is generally not subject to a charging order, which means a creditor of the member:

Accepted Answer

Can only obtain a charging order entitling them to the debtor-member's distributions, not governance rights

Answer

Can seize the member's interest and vote it

Answer

Can force liquidation of the LLC

Answer

Has no remedy against the member's interest

Question 5

Shareholders in a Florida close corporation may have a reasonable expectation of employment or management participation, and a majority shareholder who freezes out a minority shareholder may be liable for:

Accepted Answer

Breach of fiduciary duty owed to the minority

Answer

Breach of the duty of care only

Answer

Violation of the business judgment rule only

Answer

Fraudulent transfer

Question 6

Under the Florida Business Corporation Act, directors may declare dividends from which source?

Accepted Answer

Surplus (assets exceeding liabilities plus stated capital) or net profits

Answer

Any corporate funds, including stated capital

Answer

Shareholder loans only

Answer

Authorized but unissued shares