Asked by Colton Weatherwax on Jul 09, 2024
Verified
Big Corporation (BC) was dominated by its president,Mr.Vincent.He used his dominance for an improper purpose-defrauding lenders to the corporation.As a result,a court can:
A) impose criminal penalties on him.
B) make him personally liable on the debts to those lenders.
C) terminate the corporate charter of BC.
D) compel him to resign.
Corporate Charter
A legal document that establishes a corporation and outlines its structure, rights, and responsibilities.
Imposing Criminal Penalties
The act of enforcing legal sanctions or punishments for violations of criminal laws.
- Understand the legal concept of piercing the corporate veil and the reasons behind it.
- Analyze the implications of corporate actions on shareholders and creditors.
Verified Answer
DB
Daphne BazileJul 13, 2024
Final Answer :
B
Explanation :
A member is not personally liable for a nonprofit corporation's acts or liabilities merely by being a member.However,a court may pierce the veil of a nonprofit corporation if it is used to defraud creditors,circumvent a statute,or evade an existing obligation,the same grounds on which a for-profit corporation's veil may be pierced.
Learning Objectives
- Understand the legal concept of piercing the corporate veil and the reasons behind it.
- Analyze the implications of corporate actions on shareholders and creditors.
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