Question

Review Assignment (Chapters 39,40, and 41 Please sel in full sentences and check carefully for spelling errors. Make sure your assignment is typed, numbered and double- spaced. lect seven questions and provide written answers in paragraph form, Please answer 1. Define the term "quorum." 2. What are some of the factors guiding the courts in a lawsuit involving "piercing the corporate veil"? 3. What are the steps for bringing a corporation into existence? Who is liable for pre incorporation contracts?

Answer 1

1.

Quorum Definition: The number of persons who must be present at a meeting in order that the meeting can officially take place. With companies the quorum of members meetings is fixed by the article of association.

2.

The phrase piercing the corporate veil is used to describe the action of a court to hold corporate shareholders personally liable for the debts and liabilities of a corporation.

Corporations are separate entities from their shareholders and in normal circumstances, if a corporation is sued, the individual shareholders and officers cannot be brought into the lawsuit. But there are cases in which the corporation's officers and shareholders could be sued for negligence or for debts; the action of bringing in these shareholders to be sued is called "piercing the corporate veil" or "lifting the corporate veil."

Two instances in which the corporate veil might be pierced by the court, allowing shareholders to be sued:

• In the case of fraud, in which the corporation was found to be a sham that was set up for the purpose of carrying on fraudulent deals or for fraudulent purposes.
  
• In the case of egregious and willful activity by corporate shareholders or officers which put corporate gain over public good.