MD Bar Business Organizations Flashcards

Under Maryland law, when does a corporation legally come into existence?

Answer: When the articles of incorporation are accepted for filing by the State Department of Assessments and Taxation

A Maryland corporation comes into existence when its articles of incorporation are accepted for filing by the State Department of Assessments and Taxation.

Under Maryland corporate law, which statement best describes the 'business judgment rule'?

Answer: Courts will not second-guess directors' business decisions made in good faith on an informed basis

The business judgment rule protects directors from liability for good-faith, informed business decisions that prove unfavorable.

In Maryland, a limited liability company (LLC) is primarily governed by:

Answer: The Maryland Limited Liability Company Act

Maryland LLCs are governed by the Maryland Limited Liability Company Act, which provides flexible management and liability rules.

Under Maryland law, what are the primary fiduciary duties owed by a corporation's directors to shareholders?

Answer: Duties of care and loyalty

Corporate directors owe fiduciary duties of care and loyalty to the corporation and its shareholders.

In a Maryland general partnership, which statement is TRUE regarding partner liability?

Answer: Partners are jointly and severally liable for all partnership debts and obligations

In a general partnership, all partners are jointly and severally liable for all debts and obligations of the partnership.

Under Maryland law, which is a distinguishing feature of a limited partnership?

Answer: Limited partners who actively participate in management may lose their liability protection

A limited partner who participates substantially in the control of the partnership's business risks losing liability protection and being treated as a general partner.