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Unformatted text preview: Although some states allow corporations to pay dividends up to the amount of earned surplus, the MBCA governs maximum dividend amounts by requiring that both the balance sheet test and the solvency test be applied and passed. 27. The directors' motion should be overruled and the dismissal request should be denied. Demand on the board is excused here, because it would be futile. If a demand were made, the directors would be asked to sue themselves. They cannot make a disinterested decision on that question. The directors may ultimately prevail in the suit if they are entitled to the protection of the business judgment rule, but the case should not be dismissed at this early stage on the ground asserted by the directors. Answers to Student Study Guide and Workbook Questions 74...
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- Spring '09
- Dividend, MBCA, solvency test, balance sheet test, Notbad