Business Law Quiz

What is the main advantage of incorporating a business?

• Unlimited liability

• Double taxation

• Limited liability

• Higher profits

A corporation formed in Thailand but doing business in the U.S. is called:

• Domestic

• Public

• Foreign

• Alien

Which scenario may cause a court to pierce the corporate veil?

• Paying taxes on time

• Keeping personal and corporate accounts separate

• Using corporate funds for personal vacation

• Holding shareholder meetings regularly

The Business Judgment Rule does NOT protect directors who:

• Made decisions in good faith

• Were negligent

• Acted with conflict of interest

• Had a rational basis

Which of the following best describes a derivative suit?

• Shareholder suing for personal harm

• Shareholder suing on behalf of the corporation

• Corporation suing a director

• Employee suing the corporation

What is a public corporation?

• Any company with shareholders

• A government-formed corporation

• A nonprofit business

• A company traded on NYSE

Who is protected under the Business Judgment Rule?

• Shareholders

• Employees

• Directors and Officers

• Creditors

Preemptive rights allow shareholders to:

• Receive dividends first

• Buy shares in a competitor

• Prevent other shareholders from voting

• Maintain ownership percentage in new issues

A foreign corporation must obtain a __________ to operate legally in another state.

• Stock certificate

• Proxy

• Certificate of authority

• Power of attorney

Shareholders may vote using a:

• Power of sale

• Preemptive right

• Proxy

• Derivative suit