Under Which of the Following Conditions Would a Shareholder Be

question 8

Multiple Choice

Under which of the following conditions would a shareholder be liable to the corporation or its creditors?

• A) If he or she buys stock that was fully paid for when issued.
• B) If he or she deals only with dividends and not shares.
• C) If he or she is involved in "watered stock" situations.
• D) If he or she was unaware of the illegality of the dividends.

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Definitions:

Confederal System

A confederal system is a form of government where autonomous states or regions come together to form a loose federation, retaining most of the governance power while delegating limited powers to a central authority.

Articles Of Confederation

The original founding document of the United States that outlined a loose union of the states under a weak federal government, eventually replaced by the U.S. Constitution.

Constitution

The fundamental principles and established precedents according to which a state or other organization is governed, often in the form of a written document.

Preemption

The doctrine that allows a higher level of government to override or prevent actions of a lower level of government in certain areas.