question archive Under the corporate form of business organization:    A

Under the corporate form of business organization:    A

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Under the corporate form of business organization:
  
A. a stockholder is personally liable for the debts of the corporation.

B. the corporation's life is stipulated in its charter.

C, stockholders wishing to sell their corporation shares must get the approval of other stockholders.

D. stockholders' acts can bind the corporation even though the stockholders have not been appointed as agents of the corporation.

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Step 1 of 2

Evaluate the form of the corporate organization as mentioned below-

A statement that the stock holders are personally liable for the debts of the company is incorrect as the stock holder has made some contribution to the company. Liability of the stockholders lies within that range only

Rights of the stockholder can be transferred to another stock holder as shares can be sold on the secondary market. So no approval is required from the other stock holders.

Unless the stock holders have been appointed as the agents of the company, their acts cannot bind the corporation. So the said statement is incorrect.

None of the explained options are correct.

Explanation | Common mistakes | Hint for next step

Stock holders are the people associated with the company but have the separate entity so they are liable only for the amounts invested or their contribution to the company that is they are not personally liable.

Rights of the stockholders can be transferred without obtaining the approval of other stock holders. Acts of the company cannot be bind by the stock holders if they have not been selected as the agents of the company.

Step 2 of 2

Evaluate all the correct option associated with the question.

Charter of the company or the corporation states the authority and the rights of the company which is given by the company to the person concerned.

The corporation's life is stipulated in its charter.


Explanation

It is the charter of the company which contains the rules and the regulations of the company. Authority and granting of rights are done with due respect to the charter. So the life of the corporate stipulated in its charter is the correct statement.

Answer

The corporation's life is stipulated in its charter.