AceCom Corporation Issues Dividends to Its 30 Shareholders

question 90

Multiple Choice

AceCom Corporation issues dividends to its 30 shareholders.Each shareholder is well aware that the corporation will be insolvent and unable to pay its creditors following the dividend distribution.Efone is one such creditor.Under the Model Business Corporation Act (MBCA) ,primary liability to Efone:

• A)does not lie with the shareholders because they can never be held liable to creditors of the corporation.
• B)lies with the shareholders because they received the distribution from the corporation with knowledge of the impending insolvency.
• C)lies with the directors because they authorized the unlawful distribution of dividends.
• D)does not lie with the directors because they placed the interests of the shareholders above everything else.

Recognize the conditions under which a negotiable instrument may be transferred or assigned.

Grasp the legal ramifications of signatures, terms, and conditions on negotiable instruments.

Understand the concept of demand instruments and their immediate payable nature.

Explain the consequences of discrepancies or loss of negotiable instruments.

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Definitions:

Demurrer

A civil motion that attacks the plaintiff’s complaint by assuming the truth of the facts stated in the complaint for purposes of the motion, and by arguing that even if these facts are true, there is no rule of law entitling the plaintiff to recovery. Roughly similar to the motion to dismiss for failure to state a claim on which relief can be granted.

Interrogatory

A written question that one party in a lawsuit sends to another party as part of the discovery process, which must be answered in writing and under oath.

Directed Verdict

A verdict issued by a judge who has, in effect, taken the case away from the jury by directing a verdict for one party. Usually, the motion for a directed verdict is made at trial by one party after the other party has finished presenting his evidence.

Depositions

Formal, recorded testimonies of witnesses taken under oath outside of court, used in the discovery process before a trial.