ND Bar Practice Questions - North Dakota Bar Examination Exam

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Three shareholders form a North Dakota corporation but fail to observe formalities, commingle personal and corporate funds, and leave it grossly undercapitalized. A creditor seeks to hold them personally liable. The doctrine that may allow this is:

Piercing the corporate veil, available where shareholders abuse the corporate form (e.g., commingling, undercapitalization) to work an injustice The business judgment rule Ultra vires Apparent authority

Correct Answer:

Piercing the corporate veil, available where shareholders abuse the corporate form (e.g., commingling, undercapitalization) to work an injustice

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