Stockholders Have Limited Liability Unless They

question 13

Multiple Choice

Stockholders have limited liability unless they:

• A)are active in the management of the corporation.
• B)personally endorse company notes.
• C)own preferred stock.
• D)convert their shares to partnership status.

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Definitions:

Lien

A lien is a legal right or claim against a property by a creditor, securing the payment of a debt or the performance of some obligation.

Negotiable Instrument

A document that promises the payment of a certain sum of money, either upon request or at a predetermined time, with the name of the individual responsible for paying included on the document.

Gift

Something voluntarily transferred by one person to another without expectation of payment or something in return.

Good Faith

An honest intention to act without taking an unfair advantage over another party, typically in negotiations or contracts.