Commercial Law, 2011 Bar — Question 55

MULTIPLE CHOICE

The Corporation Code sanctions a contract between two or more corporations which have interlocking directors, provided there is no fraud that attends it and it is fair and reasonable under the circumstances. The interest of an interlocking director in one corporation may be either substantial or nominal. It is nominal if his interest: A) does not exceed 25% of the outstanding capital stock. B) exceeds 25% of the outstanding capital stock. C) exceeds 20% of the outstanding capital stock. D) does not exceed 20% of the outstanding capital stock.

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