MN Bar Business Organizations and Corporations

Question 1

Under the Minnesota Business Corporation Act (Minn. Stat. Ch. 302A), the duty of care owed by a director requires the director to act:

Accepted Answer

In good faith and in a manner reasonably believed to be in the best interests of the corporation

Answer

In a manner that maximizes shareholder profits

Answer

With the same care as a certified public accountant

Answer

Only upon advice of legal counsel

Question 2

Under Minnesota law, the business judgment rule protects corporate directors from liability for business decisions when:

Accepted Answer

The director acted in good faith, was informed, and had no conflicting interest

Answer

The decision results in profit for the corporation

Answer

The decision was unanimously approved by the board

Answer

Shareholders ratified the decision after the fact

Question 3

Under Minnesota corporate law, when may a court pierce the corporate veil and hold shareholders personally liable?

Accepted Answer

When the corporate form is used as a facade for fraud or injustice and there is unity of interest between the corporation and shareholder

Answer

Whenever a corporation is unable to pay its debts

Answer

When the corporation has fewer than 10 shareholders

Answer

When shareholders fail to attend annual meetings

Question 4

Under the Minnesota Revised Uniform Limited Liability Company Act, members of an LLC are generally:

Accepted Answer

Not personally liable for LLC debts beyond their capital contribution

Answer

Personally liable for all LLC debts

Answer

Subject to liability based on their percentage ownership

Answer

Only protected if they are passive investors

Question 5

Under Minnesota partnership law, in a general partnership, each partner is liable for partnership debts:

Accepted Answer

Jointly and severally

Answer

Only up to their capital contribution

Answer

Only if they were involved in creating the debt

Answer

Only up to 50% of the total debt

Question 6

Under Minnesota law, a corporation's articles of incorporation must be filed with:

Accepted Answer

The Minnesota Secretary of State

Answer

The county recorder in the county of the principal office

Answer

The Minnesota Department of Commerce

Answer

The district court in the county of incorporation