Where a Corporation Is Not Able to Pay the Debts

question 64

True/False

Where a corporation is not able to pay the debts it owes, the creditors can turn to the shareholders for payment.

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Definitions:

Personal Liability

involves the responsibility of an individual to personally satisfy debt or liability, potentially involving personal assets.

Fiduciary Relationship

A legal relationship wherein one party has the duty to act in another's best interests in matters over which they hold a trust or confidence.

Director

A member of the board of directors of a company who is responsible for participating in the decision-making processes regarding the company's management.

Officer Of The Corporation

A high-level management official within a corporation, usually appointed by the board of directors, responsible for day-to-day operations and implementing corporate policies.