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

The duty of loyalty requires directors to prioritize the corporation's interests over their personal interests and to avoid conflicts of interest or self-dealing transactions.

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

The business judgment rule protects directors who make good faith, informed decisions in the corporation's interest from personal liability, even when those decisions ultimately harm the corporation.

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

A merger of Louisiana corporations generally requires approval by the board of directors of each corporation and a majority vote of the shareholders of each constituent 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

Under Louisiana law, a dividend is unlawful if it would render the corporation insolvent or unable to pay its debts as they come due in the ordinary course of business.

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

Under the Louisiana Business Corporation Act, shareholders may remove a director with or without cause by majority vote, unless the articles of incorporation specifically require cause for removal.

(LA Bar) Louisiana Bar Exam Practice Test

(LA Bar) Louisiana Bar Exam Practice Test

LA Bar Business Organizations 2