LA Bar Business Organizations 2

Question 1

Which fiduciary duty requires a Louisiana corporate director to avoid self-dealing and conflicts of interest when making decisions on behalf of the corporation?

Accepted Answer

Duty of loyalty

Answer

Duty of care

Answer

Duty of disclosure

Answer

Duty of obedience

Question 2

The business judgment rule in Louisiana corporate law shields directors from liability when they:

Accepted Answer

Make informed, good faith decisions in the corporation's interest, even if the outcome is unfavorable

Answer

Make decisions that always result in profits for the corporation

Answer

Follow the instructions of majority shareholders at all times

Answer

Consult outside legal counsel before every major corporate decision

Question 3

Under Louisiana law, which of the following is generally required to effectuate a valid merger of two Louisiana corporations?

Accepted Answer

Board approval of each corporation and approval by a majority of shareholders of each corporation

Answer

Unanimous approval of all shareholders of both corporations

Answer

Approval only by the board of directors, with no shareholder vote required

Answer

A three-fourths supermajority vote of all outstanding shares of each corporation

Question 4

A Louisiana corporation's board of directors declares a dividend. Under which circumstance would the declaration be unlawful?

Accepted Answer

The dividend would render the corporation unable to pay its debts as they become due in the ordinary course of business

Answer

The corporation has not paid dividends in the previous two fiscal years

Answer

Not all shareholders voted in favor of the dividend declaration

Answer

The corporation's annual shareholders' meeting has not yet been held for that fiscal year

Question 5

Under the Louisiana Business Corporation Act, shareholders may remove a director:

Accepted Answer

By majority vote at any time, with or without cause, unless the articles of incorporation require cause for removal

Answer

Only for cause, upon proof of fraud or gross negligence

Answer

Only through a court proceeding initiated by shareholder petition

Answer

Only by unanimous vote of all remaining shareholders

Question 6

Which of the following most accurately describes the equitable doctrine of 'piercing the corporate veil' under Louisiana law?

Accepted Answer

An equitable doctrine holding shareholders personally liable when they fraudulently abuse the corporate form to evade obligations

Answer

A procedure allowing majority shareholders to access corporate assets for personal use

Answer

A process by which a corporation may be involuntarily converted to an LLC by court order

Answer

A statutory right permitting creditors to consolidate multiple defendant corporations for collection purposes

Question 7

Under Louisiana law, the primary purpose of the annual shareholders' meeting of a corporation is to:

Accepted Answer

Elect directors and transact other proper business brought before the meeting

Answer

Approve the corporation's operating budget for the upcoming fiscal year

Answer

Ratify all contracts executed by officers during the prior year

Answer

Approve the compensation packages of all corporate officers and key employees