Business and Corporate Law Flashcards
7 cards from real ACCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business and Corporate Law flashcards as text
Which element distinguishes a public corporation from a close (closely held) corporation?
Answer: A public corporation has shares traded on a public securities exchange
A public corporation has shares available for trading on a public stock exchange, while a close corporation's shares are held by a small group and not publicly traded.
Under the Uniform Commercial Code (UCC), which article governs the sale of goods in the United States?
Answer: Article 2
UCC Article 2 governs contracts for the sale of goods, establishing rules for formation, performance, breach, and remedies.
What is the primary duty of a corporate director under the duty of loyalty?
Answer: To avoid placing personal interests above the corporation's interests
The duty of loyalty requires directors to prioritize the corporation's interests over their own and to disclose and abstain from conflicts of interest.
In US bankruptcy law, what is the key difference between Chapter 7 and Chapter 11 proceedings?
Answer: Chapter 7 involves liquidation; Chapter 11 allows reorganization while continuing operations
Chapter 7 involves liquidating assets to pay creditors, while Chapter 11 allows the debtor to reorganize and continue operating under a court-approved plan.
Which legal theory allows plaintiffs to hold a parent corporation liable for the debts of its subsidiary?
Answer: Piercing the corporate veil
Courts may pierce the corporate veil and impose liability on a parent or shareholders when the subsidiary is used as a mere alter ego or to perpetrate fraud.
Under the Securities Act of 1933, what is the primary purpose of the registration requirement for public securities offerings?
Answer: To ensure investors receive adequate disclosure of material information
The Securities Act of 1933 requires issuers to register securities and provide full disclosure so investors can make informed decisions.
What is the legal effect of a corporation's ratification of an agent's previously unauthorized act?
Answer: The corporation becomes bound as if it had authorized the act from the beginning
Ratification retroactively validates the unauthorized act, binding the principal as if original authority had been granted.