Redemption of Shares Is Not Permitted If the Corporation

question 35

Multiple Choice

Redemption of shares is not permitted if the corporation:

• A) asks for an injunction.
• B) would, by that action, reduce total assets below the stated capital amount.
• C) has outstanding treasury shares.
• D) is likely to be rendered insolvent.

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Definitions:

Owner's Equity

The total value of assets owned by the proprietorship after all debts and liabilities have been settled; essentially the net worth of a company.

Liabilities

Financial obligations or debts owed by a business to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.

Assets

Assets are possessions or property that a company owns or controls, anticipated to yield benefits in the future.

Claims

Demands for payment or entitlements to compensation for loss, damage, or injury; often encountered in insurance and legal contexts.