Kramer Is the Sole Director and Shareholder of a Failing

question 11

Multiple Choice

Kramer is the sole director and shareholder of a failing corporation.In his role as director,Kramer has elected to declare dividends even though doing so will cause the corporation to default on its outstanding loan from the bank.Which statement best describes Kramer's risk of liability for this decision?

• A) Kramer is immune from liability because of the separate legal existence of the corporation.
• B) Kramer can be personally sued for breaching his duty of care to a creditor of the corporation.
• C) Kramer is immune from liability because he is a director of the corporation.
• D) Kramer can be personally sued by the creditor because he has breached his duty of competence.

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Definitions:

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