What Best Describes the Circumstances in Which a Director May

question 34

Multiple Choice

What best describes the circumstances in which a director may transact with the corporation?

• A)Procedural safeguards to avoid conflicts of interest and to provide transparency are observed in connection with the approval of the transaction and it is fair and reasonable to the corporation.
• B)The corporation receives a benefit from the transaction.
• C)A judge has given approval to the transaction.
• D)The director abstains from voting when the directors vote on the approval of the transaction.
• E)The director provides a notice to the board of benefits the director will receive from the transaction.

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Definitions:

Loan

A sum of money that is borrowed and expected to be paid back with interest by the borrower to the lender.

Accounting Equation

The foundational formula in accounting that states assets equal liabilities plus owners' equity, essentially showing what the company owns is financed by debt and shareholders' equity.

Land Sale

A land sale involves the transaction where ownership of a piece of land is transferred from one party to another, typically involving legal documentation and financial compensation.

Loan Payoff

A payment or series of payments made to clear a loan's outstanding balance.