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Exam 32: Limited Liability Companies and Special Business Forms

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Question 31

Multiple Choice

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Leon, Michael, Nolan, and O'Neill join together to buy a professional basketball franchise. Their selected form of business organization is an investment group, which is also known as

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

E) None of the above
F) All of the above

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Question 32

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A limited liability company is a citizen only of the state in which it was formed.

A) True
B) False

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Question 33

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Commerce & Trade Corporation and Distance Shipping & Transport, Inc., form a business trust. eCharge Auto Company and Fleet Electric Corporation form a joint stock company. Green AgriCorp and Harvest Farms, Inc., form an incorporated cooperative. What features do these combinations of business organization have in common?

In a state in which the managers of a limited liability company owe fiduciary duties to the firm and its members, those members can sue the managers for breaching a fiduciary duty.

When the promoter of a limited liability company enters into a preformation contract on the firm's behalf, the company must adopt the contract to enforce it.

When a limited liability company is dissolved, the members may preserve the assets for a reasonable time to optimize their return during the winding up process.

If a member of a limited liability company dissociates from the firm in violation of the operating agreement, the member can be held liable for any loss to the business resulting from the withdrawal.

Because title to the property of a limited liability company must be held in the name of one or more of its members, disputes over its ownership is avoided.

Rocket Corporation and Star Inc. wish to combine their capabilities to launch a single flight to the moon. The appropriate legal entity for this project is most likely

A syndicate may be organized as a corporation or a partnership, or in some situations as no recognizable form of business organization.

If the members of a limited liability company want to reinvest profits in the business, they may opt for the firm to be taxed as a corporation.

Orly's Adventure Travel and Paquito's Wild River Tours form a joint venture. Orly can participate in the venture's management to

Data Analytics LLC is a limited liability company. Unless the firm's articles of organization specify otherwise, it will most likely be assumed that the firm is

An operating agreement is required for a limited liability company to exist, and it must be in writing.

Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

Like partners, unless otherwise agreed, joint venturers have an equal voice in controlling a venture-related project.

Like a sole proprietorship or a partnership, the members of a limited liability company have unlimited liability for the firm's debts.

Unlike a sole proprietorship or a partnership, a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.

Singh, a member of Trucking LLC, ceases to be associated in the carrying on of the business of the firm. Despite the dissociation

Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be