Which of the Following Is NOT True of Shareholder Liability

question 28

Multiple Choice

Which of the following is NOT true of shareholder liability?

• A)Shareholders are liable for watered stock
• B)Shareholders are personally liable for receiving illegal dividends.
• C)Shareholders are liable for a breach of contract if a stock subscription agreement was signed and no stock was purchased
• D)Shareholders are liable for violations of the business judgment rule
• E)Shareholders are liable for the debts of a corporation to the extent of their investment

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Definitions:

Coupled With An Interest

A right or benefit that cannot be taken away because it is legally attached to another property or contractual right.

Agency Agreement

A legal contract creating a fiduciary relationship wherein the first party ("the principal") agrees that the actions of a second party ("the agent") binds the principal to later agreements made by the agent as if the principal had himself personally made the later agreements.

Writing

A method of recording language through the inscription or recording of signs and symbols.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another. The party in a fiduciary relationship is usually referred to as the fiduciary, while the other is the principal or beneficiary.