Business Entities Flashcards
6 cards from real FL BAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Business Entities flashcards as text
Under federal securities law (Rule 10b-5), insider trading is prohibited when a person trades on material non-public information obtained through:
Answer: A breach of a duty of trust or confidence
Rule 10b-5 insider trading liability under the misappropriation theory requires trading on material non-public information obtained by breaching a duty of trust or confidence owed to the source.
Which of the following is a characteristic unique to a Florida S corporation?
Answer: Its income and losses pass through to shareholders for individual taxation
An S corporation is a pass-through entity — income and losses flow directly to shareholders' individual tax returns, avoiding double taxation at the corporate level.
In Florida, a sole proprietor differs from an LLC member because the sole proprietor:
Answer: Has unlimited personal liability for all business obligations
A sole proprietor has no liability shield — all business debts and obligations are the personal liability of the owner, unlike an LLC member whose liability is generally limited to their investment.
Under FRUPA (Florida Revised Uniform Partnership Act), a partnership is formed:
Answer: When two or more persons associate to carry on as co-owners of a business for profit
Under Florida's FRUPA, a general partnership is formed automatically when two or more persons associate as co-owners to carry on a business for profit — no filing or written agreement is required.
A director of a Florida corporation has a duty of loyalty that is breached when the director:
Answer: Engages in a self-dealing transaction without disclosure and approval
The duty of loyalty prohibits directors from engaging in self-dealing transactions — contracts in which the director has a personal financial interest — without full disclosure and approval by disinterested directors or shareholders.
A dissenting shareholder's right of appraisal in Florida allows the shareholder to:
Answer: Receive the fair value of their shares in cash when they dissent from a fundamental corporate change
Florida § 607.1301 et seq. grants dissenting shareholders the right to receive the judicially determined fair value of their shares in cash — appraisal rights are a buyout remedy, not a blocking mechanism.