LOUISIANA BUSINESS ENTITIES
EXAM QUESTIONS & CORRECT
ANSWERS (VERIFIED GRADE A+)
UPDATED 2026/2027
What must be included in the articles of incorporation? -CORRECT ANSWERS- The name of the
corporation
Number of shares the corporation is authorized to issue
Street address of initial registered office and principal office, if applicable
Name and street address of initial registered agent
Name and street address of each incorporator
Whether the corporation accepts, limits, or rejects liability for directors and officers
What must be filed to form a corporation? -CORRECT ANSWERS- Articles of Organization and Affidavit of
Acceptance by Initial Registered Agent
What are the Bylaws? -CORRECT ANSWERS- These are adopted by the board of directors and can be
changed either by the board or by the shareholders. They may contain any provision for managing the
corporation that is not inconsistent with the law or articles of incorporation. However, the articles of
incorporation may reserve the power to modify or amend the bylaws to the shareholders. Even without
this reservation, the shareholders may provide that a particular bylaw adopted or amended by them
may not be repealed or amended by the directors.
Does a director of a corporation, acting alone, have the authority to sign contracts on behalf of a
corporation and thereby bind the corporation? -CORRECT ANSWERS- No. A corporate director has no
authority to act on behalf of the corporation as its mandatary and does not have the authority to sign
contracts on behalf of the corporation nor bind the corporation.
What are the legal duties owed by directors and officers to a corporation? -CORRECT ANSWERS- The
directors and officers of a corporation owe the corporation and its shareholders a fiduciary duty of both
loyalty and care.
, Who has the authority to sign contracts on behalf of the corporation and bind the corporation? -
CORRECT ANSWERS- Only duly assigned officers or employees have such authority. A director may also
be an officer or employee.
Can a shareholder withdraw from the corporation? -CORRECT ANSWERS- No, typically a shareholder
does not withdraw from the company because they are the owners of the company. Ordinarily though,
a shareholder can sell or give away her shares of stock at anytime.
Explain the term "cumulative voting" and under what circumstances it is available to shareholders. -
CORRECT ANSWERS- It is a device that gives minority shareholders a better chance to elect a director to
the board than the shareholders would have using the ordinary voting procedure. Each share may cast
as many votes as there are board vacancies to be filled. It must be provided in the articles to be available
to the shareholders.
Who may be held liable for unlawful dividends issued by a corporation and when must the action be
brought? -CORRECT ANSWERS- All directors who knowingly or without due care vote in favor of an
unlawful dividend are jointly and severally liable to the corporation for the amount that was paid
unlawfully. Any director who is held liable may seek indemnification from the shareholder that received
the unlawful dividend, whether they knew it was unlawful or not.
What vote is required for members of an LLC to sell or lease immovable property? Would your answer
change if the LLC was manager-managed? -CORRECT ANSWERS- Unless the AOO provide otherwise, the
lease, alienation, or encumbrance of immovable property must be authorized only by a majority vote of
the members, whether it is member-managed or manager-managed.
What is a a voting trust? -CORRECT ANSWERS- It is a trust created by one or more shareholders that
ensures that a group of shares will vote a particular way. The shareholders enter into a written and
signed agreement setting forth the trusts' terms and the shareholders transfers ownership of the shares
to the trust. A copy of the trust agreement must be given to the corporation.
What business records are to be maintained at the corporation for inspection by shareholders? -
CORRECT ANSWERS- Articles of Incorporation
Bylaws
Board resolutions creating or defining rights of classes of stock
Three years' worth of minutes of shareholders' meetings
EXAM QUESTIONS & CORRECT
ANSWERS (VERIFIED GRADE A+)
UPDATED 2026/2027
What must be included in the articles of incorporation? -CORRECT ANSWERS- The name of the
corporation
Number of shares the corporation is authorized to issue
Street address of initial registered office and principal office, if applicable
Name and street address of initial registered agent
Name and street address of each incorporator
Whether the corporation accepts, limits, or rejects liability for directors and officers
What must be filed to form a corporation? -CORRECT ANSWERS- Articles of Organization and Affidavit of
Acceptance by Initial Registered Agent
What are the Bylaws? -CORRECT ANSWERS- These are adopted by the board of directors and can be
changed either by the board or by the shareholders. They may contain any provision for managing the
corporation that is not inconsistent with the law or articles of incorporation. However, the articles of
incorporation may reserve the power to modify or amend the bylaws to the shareholders. Even without
this reservation, the shareholders may provide that a particular bylaw adopted or amended by them
may not be repealed or amended by the directors.
Does a director of a corporation, acting alone, have the authority to sign contracts on behalf of a
corporation and thereby bind the corporation? -CORRECT ANSWERS- No. A corporate director has no
authority to act on behalf of the corporation as its mandatary and does not have the authority to sign
contracts on behalf of the corporation nor bind the corporation.
What are the legal duties owed by directors and officers to a corporation? -CORRECT ANSWERS- The
directors and officers of a corporation owe the corporation and its shareholders a fiduciary duty of both
loyalty and care.
, Who has the authority to sign contracts on behalf of the corporation and bind the corporation? -
CORRECT ANSWERS- Only duly assigned officers or employees have such authority. A director may also
be an officer or employee.
Can a shareholder withdraw from the corporation? -CORRECT ANSWERS- No, typically a shareholder
does not withdraw from the company because they are the owners of the company. Ordinarily though,
a shareholder can sell or give away her shares of stock at anytime.
Explain the term "cumulative voting" and under what circumstances it is available to shareholders. -
CORRECT ANSWERS- It is a device that gives minority shareholders a better chance to elect a director to
the board than the shareholders would have using the ordinary voting procedure. Each share may cast
as many votes as there are board vacancies to be filled. It must be provided in the articles to be available
to the shareholders.
Who may be held liable for unlawful dividends issued by a corporation and when must the action be
brought? -CORRECT ANSWERS- All directors who knowingly or without due care vote in favor of an
unlawful dividend are jointly and severally liable to the corporation for the amount that was paid
unlawfully. Any director who is held liable may seek indemnification from the shareholder that received
the unlawful dividend, whether they knew it was unlawful or not.
What vote is required for members of an LLC to sell or lease immovable property? Would your answer
change if the LLC was manager-managed? -CORRECT ANSWERS- Unless the AOO provide otherwise, the
lease, alienation, or encumbrance of immovable property must be authorized only by a majority vote of
the members, whether it is member-managed or manager-managed.
What is a a voting trust? -CORRECT ANSWERS- It is a trust created by one or more shareholders that
ensures that a group of shares will vote a particular way. The shareholders enter into a written and
signed agreement setting forth the trusts' terms and the shareholders transfers ownership of the shares
to the trust. A copy of the trust agreement must be given to the corporation.
What business records are to be maintained at the corporation for inspection by shareholders? -
CORRECT ANSWERS- Articles of Incorporation
Bylaws
Board resolutions creating or defining rights of classes of stock
Three years' worth of minutes of shareholders' meetings
