LA Bar Business Organizations 1 — Questions and Answers
Question 1: Under the Louisiana Business Corporation Act, how many persons are required to organize a corporation?
- One or more (Correct answer)
- Two or more
- Three or more
- Five or more
Correct answer: One or more
Louisiana law permits a single individual to form a corporation, as only one or more persons are required to act as incorporators under the Louisiana Business Corporation Act.
Question 2: Which of the following must be included in the articles of incorporation under the Louisiana Business Corporation Act?
- Names and addresses of all initial shareholders
- The corporation's specific business purpose
- The total number of shares the corporation is authorized to issue (Correct answer)
- The initial salaries of all corporate officers
Correct answer: The total number of shares the corporation is authorized to issue
The Louisiana Business Corporation Act requires articles of incorporation to state the total number of authorized shares, but does not require shareholder names, a specific business purpose, or officer salaries.
Question 3: Under the Louisiana Business Corporation Act, when does a corporation's legal existence begin?
- When the incorporators sign the articles of incorporation
- When the articles of incorporation are filed with the Secretary of State (Correct answer)
- When the corporation holds its first board of directors meeting
- When shares are first sold to shareholders
Correct answer: When the articles of incorporation are filed with the Secretary of State
Under the Louisiana Business Corporation Act, corporate existence begins upon the effective date of filing of the articles of incorporation with the Secretary of State.
Question 4: Under Louisiana law, a limited liability company (LLC) primarily offers which protection to its members?
- Unlimited personal liability for all business debts incurred by the LLC
- Liability proportional to each member's percentage of ownership
- Personal liability only for torts committed directly by the member
- Limited liability, shielding members from personal responsibility for LLC obligations (Correct answer)
Correct answer: Limited liability, shielding members from personal responsibility for LLC obligations
An LLC provides members with limited liability, meaning members are generally not personally responsible for the debts and obligations of the LLC beyond their investment.
Question 5: In a Louisiana limited partnership, which partner bears unlimited personal liability for all partnership obligations?
- All limited partners equally
- The general partner(s) only (Correct answer)
- The managing partner only, if different from the general partner
- No partner, as all enjoy limited liability
Correct answer: The general partner(s) only
In a limited partnership, the general partner has unlimited personal liability for all partnership obligations, while limited partners' liability is confined to their capital contributions.
Question 6: Under Louisiana law, what is a fundamental characteristic of a general partnership?
- Partners have limited liability for all partnership debts
- The partnership must register with the Secretary of State to be legally valid
- Each partner is an agent of the partnership and bears full personal liability for partnership obligations (Correct answer)
- Partners are only liable for their proportionate share of debts
Correct answer: Each partner is an agent of the partnership and bears full personal liability for partnership obligations
In a Louisiana general partnership, each partner acts as an agent of the partnership and is personally and jointly liable for all partnership debts and obligations.
Question 7: A professional corporation (PC) formed by licensed professionals in Louisiana differs from a regular corporation primarily because:
- Shareholders of a PC remain personally liable for their own professional malpractice, though not for other shareholders' malpractice (Correct answer)
- A PC provides complete liability protection identical to a regular corporation, including for malpractice claims
- A PC requires all shareholders to hold identical professional licenses
- A PC must be structured as a partnership for Louisiana tax purposes
Correct answer: Shareholders of a PC remain personally liable for their own professional malpractice, though not for other shareholders' malpractice
In a Louisiana professional corporation, shareholders are shielded from general business debts but remain personally liable for their own acts of professional malpractice.
LA Bar Business Organizations 1
Under the Louisiana Business Corporation Act, how many persons are required to organize a corporation?