With regard to the law of corporations,which of the following is true?
A)A director of a corporation could not be personally liable on a promissory note even if he just signed his own name,as long as at the time he had intended to sign on behalf of the corporation.
B)If a minority shareholder is treated unfairly,the appropriate relief to request is that the court "lift the corporate veil."
C)In many jurisdictions,pre-emptive rights entitle a shareholder to pass on her right to vote to someone else.
D)"Relief-from-oppression" provisions allow a party who has contracted with the corporation to force the corporation to honour a contract it has signed in an irregular manner.
E)A creditor of a corporation could sue for some remedy if the directors of the corporation voted for a resolution to pay a dividend when the corporation was insolvent.

Question

Quizplus · Accepted Answer

This statement is true under the law of corporations. Directors have a duty to ensure that a corporation only pays dividends from its profits, and not from its capital or reserves. If a corporation is insolvent, then it does not have enough profits to pay a dividend. However, if the directors vote for a resolution to pay a dividend despite knowing that the corporation is insolvent, they could be personally liable for any resulting losses to the corporation's creditors. Therefore, a creditor of the corporation could sue for some remedy in such a case.

With Regard to the Law of Corporations,which of the Following