The Revised Act permits a corporation to purchase,redeem,or otherwise acquire its own shares unless:
A) the corporation's total assets after the distribution would be less than the sum of its total liabilities and the maximum amount that would be payable for all outstanding shares having preferential rights in liquidation.
B) the corporation would be unable to pay its debts as they became due in the usual course of its business.
C) Both of these.
D) None of these.

Question

Quizplus · Accepted Answer

The Revised Act states that a corporation can purchase, redeem or acquire its own shares, but only if the corporation's total assets after the transaction do not fall below the sum of its total liabilities and the maximum amount that would be payable for all outstanding shares that have preferential rights in liquidation. Additionally, the corporation must not be unable to pay its debts as they become due in the usual course of business. Therefore, both options A and B must be considered before a corporation is permitted to purchase, redeem, or otherwise acquire its own shares.

The Revised Act Permits a Corporation to Purchase,redeem,or Otherwise Acquire