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:

Statute of Frauds

A legal concept that requires certain types of contracts to be executed in writing and signed by the party against whom enforcement is sought, to be legally enforceable.

Interest in Land

A legal right or claim to use, control, or dispose of real property.

Real Property

Land and anything permanently attached to the land, such as buildings, houses, stationary mobile homes, fences, and trees.

Statute of Frauds

A judicial principle stipulating that specific contract categories must be written and signed by the accountable party to be legally binding.