NALA ACP — Business Organizations (Incorporated Entities) Feed

Question

A client wants a business entity that provides limited liability for all owners and avoids the federal double taxation that applies to a standard for-profit corporation. The owners want maximum flexibility in allocating profits and a relatively simple management structure. Which entity best fits these goals by default?

Entity Selection And Formation

Question · Easy

Question

A corporation that has not made any special tax election is, by default, taxed under which federal regime?

Entity Selection And Formation

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Question

To elect S corporation status with the IRS, an eligible corporation must file which form?

Entity Selection And Formation

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Question

Which of the following would disqualify a corporation from electing or maintaining S corporation status?

Entity Selection And Formation

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A startup expects to raise multiple rounds of venture capital from institutional investors and to grant employee stock options, with the goal of an eventual IPO. Which entity form do sophisticated investors and underwriters most commonly require?

Entity Selection And Formation

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In a single-member LLC that has made no entity classification election, how is the entity treated for federal income tax purposes by default?

Entity Selection And Formation

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Question

What is the principal liability advantage that a corporation or LLC provides to its owners that a general partnership does not?

Entity Selection And Formation

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Question

A professional services firm of licensed architects wants limited liability but must comply with state rules governing licensed professionals practicing together. Which entity is specifically designed for this situation?

Entity Selection And Formation

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Question

Under Delaware law, a corporation legally comes into existence at what point?

Entity Selection And Formation

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Question

A general partnership wants to give its limited partners a liability shield while keeping pass-through taxation, without converting to a corporation. The owners are comparing a limited partnership (LP) and a limited liability partnership (LLP). Which statement correctly distinguishes them in most states?

Entity Selection And Formation

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What is the most commonly cited tax reason an established, profitable closely held business might choose an S corporation election over a default LLC partnership?

Entity Selection And Formation

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A nonresident alien individual wishes to become a direct shareholder of a U.S. S corporation. What is the legal effect?

Entity Selection And Formation

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Question

A benefit corporation (B corp under state law) differs from a traditional for-profit corporation primarily because its directors are legally required to:

Entity Selection And Formation

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Question

Which document is the foundational charter that legally creates a corporation, as opposed to the internal operating rules?

Formation Documents And State Filings

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Question

When forming an LLC, which document is filed with the state to create the entity?

Formation Documents And State Filings

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Question

Every corporation and LLC must designate a registered agent in its state of formation. What is the registered agent's primary legal function?

Formation Documents And State Filings

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A corporation incorporated in Delaware plans to open an office and conduct ongoing business in California. What filing is generally required before it transacts intrastate business in California?

Formation Documents And State Filings

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Which of the following is typically a REQUIRED element of a certificate of incorporation under most state corporation statutes and the DGCL?

Formation Documents And State Filings

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What is the difference between authorized shares and issued shares stated in or under a certificate of incorporation?

Formation Documents And State Filings

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After the certificate of incorporation is filed, what action is typically taken at the corporation's organizational meeting?

Formation Documents And State Filings

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Question

A corporation fails to file required annual reports and pay franchise taxes for several years. What is the most likely consequence imposed by the state?

Formation Documents And State Filings

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Question

An incorporator signs a lease for office space on behalf of a corporation before the certificate of incorporation has been filed. Under the law of pre-incorporation contracts, who is generally liable on the lease?

Formation Documents And State Filings

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A corporation wants to increase the number of shares it is authorized to issue beyond the amount in its certificate of incorporation. What is generally required?

Formation Documents And State Filings

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What is the legal significance of a corporation's bylaws relative to its certificate of incorporation if the two conflict?

Formation Documents And State Filings

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Question

An LLC operating agreement is best described as:

Formation Documents And State Filings

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Question

Under DGCL section 141(a), in whom is the management of the business and affairs of a corporation vested by default?

Corporate Governance

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What is the principal distinction between the roles of directors and officers in a corporation?

Corporate Governance

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Question

A director approves a major acquisition after reviewing materials and consulting advisors; the deal later turns out poorly and shareholders sue. Under the business judgment rule, how will a court most likely treat the director's decision?

Corporate Governance

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A director arranges for the corporation to buy property from a company the director secretly owns, at an inflated price, without disclosing the interest. Which fiduciary duty has the director most clearly breached?

Corporate Governance

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A self-interested transaction between a director and the corporation may nonetheless be upheld under safe-harbor statutes such as DGCL section 144 if which condition is satisfied?

Corporate Governance

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Question

Bylaws of a corporation typically govern which of the following?

Corporate Governance

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Under most corporation statutes, what is a quorum for a board of directors' meeting unless the bylaws or charter provide otherwise?

Corporate Governance

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May a board of directors take action without holding a meeting?

Corporate Governance

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A director relies in good faith on financial statements prepared by the corporation's CFO and reviewed by outside auditors. The figures later prove fraudulent, but the director had no reason to suspect the fraud. How does corporate law generally treat the director's reliance?

Corporate Governance

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What is the corporate opportunity doctrine?

Corporate Governance

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Question

A creditor of an LLC seeks to hold the sole member personally liable, arguing the member commingled personal and company funds, ignored formalities, and left the LLC undercapitalized. What legal theory is the creditor invoking?

Corporate Governance

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Question

Which practice best helps preserve limited liability and reduce the risk that a court will pierce the corporate veil?

Corporate Governance

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Question

In a manager-managed LLC, which parties generally owe fiduciary duties to the company and the other members?

Corporate Governance

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Question

Under DGCL section 145, a corporation may indemnify a director or officer for expenses incurred in defending a lawsuit if the person:

Corporate Governance

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Question

What is an exculpation provision under DGCL section 102(b)(7)?

Corporate Governance

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What is the proper procedure for amending a corporation's bylaws under typical statutes and the DGCL?

Corporate Governance

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Question

An act by a corporation that exceeds the powers granted in its charter or by statute is described by which doctrine?

Corporate Governance

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What is the role of the corporate secretary in governance?

Corporate Governance

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Question

A board wants to delegate authority over a sensitive matter to a small group of directors. Under DGCL section 141(c), the board may generally:

Corporate Governance

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Question

Directors elected to serve in groups with staggered, multi-year terms so that only a portion of the board is elected each year are said to constitute a:

Corporate Governance

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Which of the following is generally a non-delegable decision that the full board (and often shareholders) must approve rather than a committee or officer?

Corporate Governance

Question · Medium

Question

The two principal fiduciary duties that directors owe to the corporation and its shareholders are best described as:

Corporate Governance

Question · Easy

Question

Under most statutes, when a corporation removes a director before the end of the director's term, the general default rule for a corporation without a classified board is that shareholders may remove the director:

Corporate Governance

Question · Hard

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