Personal liability from the debts of the corporation

Assignment Help Business Management
Reference no: EM131995305

Cathy, an electrical contractor, sets up a corporation in which she is the sole stockholder and president. Her husband, Claude, is the secretary and both she and her husband serve on the corporation's board of directors as its only two members. Cathy, who was a sole proprietor before incorporating her company, continues to run her business exactly as before. She pays company debts out of her personal checking account and deposits all checks payable to the company in her personal checking account. In addition, she does not consult her husband on any business decisions or hold regular meetings of the board of directors. She does, however, hold yearly stockholder's meetings and votes to re-elect herself and her husband as directors; her husband dutifully records the minutes of these meetings.

A. Does the fact that there is only one shareholder invalidate this corporation?

B. If the corporation becomes insolvent, will Cathy be sheltered against personal liability from the debts of the corporation? Explain fully.

C. Assume that Cathy and Claude run the corporation as a bonafide organization, keeping proper records of all necessary meetings and carefully avoiding the commingling of corporate and private funds. How would you classify this corporation in the state that it is organized and in which Cathy does business?

Reference no: EM131995305

Questions Cloud

Patient through the required reporting process : Does the fact that a facility reports personally identifiable information about a patient through the required reporting process need to be included
Determining the independent contractor : The hospital maintains that it is not liable because Dr. Aumentado was an independent contractor. Is the hospital correct?
Specific provisions of the immigration laws : What specific provisions of the immigration laws do employers rely upon to obtain skilled workers today?Are any changes on the horizon?
How healthcare organizations should track the disclosures : Discuss how disclosures are made: writing-, electronically, phone-, orally). You should also discuss how healthcare organizations should track the disclosures
Personal liability from the debts of the corporation : If the corporation becomes insolvent, will Cathy be sheltered against personal liability from the debts of the corporation? Explain fully.
Explain the theory of respondeat superior : Explain the theory of respondeat superior and its impact on liability to third parties. When does it apply and when doesn't it apply?
Different types of agency relations : What duties do principal have the agent? What duties to agents have principals? What remedies do each party has against the other if that duty is breached?
Executive secretary of syncsort : Lewis was hired for a two-year period as executive secretary of Syncsort Inc. Six months later he was fired. He then sued Syncsort for breach of contract
Liability of principals and independent contractors : Cora and Caley, CARDWARE's co-office managers have determined that CARDWARE Inc. is growing so rapidly that they need to hire a part-time

Reviews

Write a Review

Business Management Questions & Answers

  Which case(s) in the book support your opinion?

Changing the facts of the case, assume the client hired Kay & Lee to audit the financial statements, explaining that the purpose of the audit is to negotiate a loan The name of the bank is unknown to the auditors Under which legal principle could ..

  What happened to cause bankruptcy

In fall 2013, Apple loaned it sapphire glass supplier $578 million to set up a manufacturing plant to produce the glass for the new iPhone 6. In November 2014, Apple's glass supplier lost the contract and promptly filed for bankruptcy. What happen..

  Expected rate of return and risk

Complete the following Study Problems from your textbook. The numbers in parentheses refer to the chapter and the problem number, for example 3-5 refers to Chapter 3, problem 5. The Study problems are linked at the bottom of the page.

  Expectations on products produced in a specific country

1. Explain Country-of-Origin (COO). Does the COO have an affect on what consumer buy?

  How can mr smith improve market share

What should Joe do? or How can Mr Smith improve market share? Usually the problem statement has to be re-written several times during the analysis of a case, as you peel back the layers of symptoms or causation.

  Majority of purchasing organizations

A recent report highlighted that the main measure of performance used by the majority of purchasing organizations was reduced costs

  The importance of communication

Why is writing effectively so important to Criminal Justice professionals? Give examples on how it can affect the criminal justice process.

  Define entrepreneurship

a] Define Entrepreneurship b] What attributes should an entrepreneur possess for him to run a successful business enterprise? Lists at least 5 attributes

  Communicating your needs to your support network

Unit IV has focused on ways that you can become a better student through understanding the assignment; communicating your needs to your support network;

  Discussion of the legal requirements

In a well-written paper, research and examine individual healthcare rights. Specifically address each of the five rights noted below. Include citation of the law that established this right, a discussion of the legal requirements, and identify a n..

  Effectiveness of the new program determined

How could company policies or operating procedures harmonize with the new program. How was the effectiveness of the new program determined. How were rewards or incentives used to promote the new program.

  Discusses why learning organizations must document results

Discusses why learning organizations must document results and provided guiding principles for program evaluation and advice on what to measure and especially important, how to market the results.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd