Under What Circumstances Will a Court Hold Shareholders Personally Responsible

question 57

Multiple Choice

Under what circumstances will a court hold shareholders personally responsible for a corporation's actions?

• A) employee misrepresentation of a product
• B) fraud on customers
• C) employee negligence
• D) fraud on creditors

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Definitions:

Financial Condition

Refers to the current state of a company's financial health and stability, often assessed through its assets, liabilities, revenue, and expenses.

Corporate Charter

A legal document that establishes a corporation's existence and outlines its rights, privileges, and limitations as granted by the state of incorporation.

Monetary Value

The value of an object or service based on the amount of money that it can be bought or sold for in the market.

Limited Liability

A legal structure that limits each owner's personal liability to the amount invested in the business.