Worksheet 18.3: Piercing the Corporate Veil & Corporate Directors and Officers
Directors are hired by the shareholders through an interview process. T/F
False
Directors and officers may be liable for the actions of corporate employees under their supervision, as well as for their own torts and crimes. T/F
T
To pierce the corporate veil is to expose the shareholders to personal liability. T/F
T
Outside directors
The directors required to make a decision or take official action
Inside directors
The directors who also are officers of the corporation
Quorum
The directors who do not hold management positions at the corporation
Corporate officers are hired by the directors. T/F
True
The business judgment rule states that directors and officers:
are immune from liability for bad business judgments so long as they exercised reasonable care
When a corporation enters into a contract or engages in business with another corporation in which one of the board members has a personal interest, that board member must fully _________________ the conflict and _______________________ voting.
disclose abstain from
Individual corporate directors ________________ have the ability, as agents of the corporation, to bind the corporation.
do not
Officers and directors have a special relationship with the corporation and its shareholders and are called:
fiduciaries
Directors and officers have a duty to act selectin good _________________ , to exercise the care that a(n) __________________ person would exercise in similar circumstances, and to do what the director or officer believes is in the ____________________ of the corporation.
in good faith ordinarily prudent best interest
The type of corporation most at risk for piercing the corporate veil is the:
close corporation