Question

study: closely held corporations (chapter 39, 40)
question 4 (10 points)
tony smith was a shareholder of smith services inc. and one of the advantages of being a shareholder in a corporation is the a liability of shareholders.

1. unlimited
2. limited

question 5 (10 points)
the principle of limited shareholder liability means that shareholders are not personally liable for the debts of the corporation beyond a.

1. their net worth
2. their investment in the corporation

question 6 (10 points)
if laker express is attempting to receive payment from the extra assets of a shareholder such as tony, it would be asking the court to a.

1. pierce the corporate veil

Explanation:

• Question 4: In a corporation, shareholders have limited liability. This means their personal assets are generally protected, and they are not liable for the corporation's debts beyond their investment. So the answer is "limited".
• Question 5: The principle of limited shareholder liability specifically states that shareholders are not personally liable for the corporation's debts beyond their investment in the corporation. Their net - worth is not relevant in this context. So the answer is "their investment in the corporation".
• Question 6: When a creditor (like Laker Express) tries to go after a shareholder's extra assets, it is asking the court to "pierce the corporate veil". This is a legal doctrine that disregards the corporate entity and holds shareholders personally liable in certain circumstances (e.g., if the corporation was used to commit fraud or for improper purposes).

Answer:

Question 4: 2. limited
Question 5: 2. their investment in the corporation
Question 6: 1. pierce the corporate veil