MD Bar MD Bar Business Organizations

Question 1

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

Accepted Answer

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

Answer

When the first shareholder meeting is held

Answer

When the corporate bylaws are adopted

Answer

When the registered agent accepts the appointment

Question 2

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

Accepted Answer

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

Answer

Directors are personally liable for any business loss

Answer

Directors must maximize short-term shareholder profits

Answer

A director can ratify any action taken without prior board approval

Question 3

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

Accepted Answer

The Maryland Limited Liability Company Act

Answer

The Maryland General Corporation Law

Answer

Common law partnership principles

Answer

Federal securities regulations

Question 4

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

Accepted Answer

Duties of care and loyalty

Answer

To maximize quarterly earnings at all costs

Answer

To personally guarantee all corporate debts

Answer

To distribute dividends at least annually

Question 5

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

Accepted Answer

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

Answer

Partners have limited liability up to their capital contribution

Answer

Only the managing partner bears personal liability

Answer

Partners are not personally liable for torts committed by co-partners

Question 6

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

Accepted Answer

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

Answer

All partners share equally in management and profits

Answer

General partners enjoy limited personal liability

Answer

There must be at least three partners