Toby Was Elected to the Board of Trustees of the Chi-Town

question 11

Multiple Choice

Toby was elected to the board of trustees of the Chi-Town Corporation (CTC) four years ago.He loves to brag about his position as a board member,but he cares more about the prestige than doing a good job.As a member of the board at CTC,Toby serves on several committees.However,although the board and all of the committees meet on a regular basis,Toby has never attended any of these meetings and doesn't participate in any board decisions.If the insiders at CTC enter into a series of bad business deals that cause CTC to suffer a financial loss,what is Toby's potential liability?

• A) Toby will be shielded from liability by the corporate veil.
• B) Toby cannot be held responsible because he did not vote to approve the transactions.
• C) Toby will be liable because his inattention will likely be considered negligence and a breach of his fiduciary duty of care.
• D) Toby will be held liable because by accepting the board position he has opened himself up to liability for the actions of the corporation.

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