A Parent Corporation Will Be Liable to Creditors of a Subsidiary

question 12

Multiple Choice

A parent corporation will be liable to creditors of a subsidiary corporation:

• A) only if the parent corporation owns more than 50% of the shares in the subsidiary corporation
• B) only if the parent corporation and the subsidiary corporation have exactly the same directors
• C) only if the parent corporation owns 100% of the shares in the subsidiary corporation
• D) only if the subsidiary corporation is a private (non- distributing) corporation
• E) none of the above

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Definitions:

Cost of Living Adjustment

A change in salaries or benefits to match changes in the consumer price index, ensuring purchasing power is maintained despite inflation.

Merger

The combination of two or more companies into a single entity, often to achieve economies of scale or increase market share.

Interpersonal Communication

The process by which individuals exchange information, feelings, and meaning through verbal and non-verbal messages.

Direct Barriers

These are tangible or explicit obstacles that prevent or hinder progress towards a goal, such as legal restrictions or physical impediments.