Corps

Question 1

Piercing corp veil can happen when:

Answer 1

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1. Corp is acting as alter ego of SH (little or no separation btwn the SH and corp)
2. Where the SH failed to follow corp formalities
3. Corp was inadequately capitalized at its inception to cover debts and prospective liabilities
4. To prevent fraud

Question 2

A court will interfere with Board’s discretion and order a dividend/distribution upon a showing of:

Answer 2

1. bad faith or dishonest purpose.
2. funds were available for the dividend/distribution

Question 3

Duty of loyalty forbids directors from:

Answer 3

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1. entering into conflicting interest transactions
2. usurping a corporate opportunity
3. competing with the corp
4. trading on inside info

Question 4

Conflicting interest transaction is okay when:

Answer 4

1. approved by majority disinterested directors after full disclosure of all material facts
2. approved by majority of disinterested SH ….
3. or transaction as a whole was fair to the corp at the time it was entered into