The Model Business Corporation Act:
A)Uses the words "common" and "preferred" in describing distinguishing characteristics of stock.
B)Defines legal capital as the amount of net assets not available for distribution to shareholders.
C)Provides guidance for choosing an appropriate par value for new issues of stock.
D)Has affected the laws of most states.

Question

Quizplus · Accepted Answer

The Model Business Corporation Act has influenced the laws of most states in the US. Option A is incorrect because the Act uses the terms "voting" and "non-voting" shares to describe distinguishing characteristics of stock, not "common" and "preferred." Option B is incorrect because the Act defines legal capital as the amount of capital contributed by shareholders, not net assets. Option C is incorrect because the Act doesn't provide guidance for choosing a par value for new issues of stock.