Commercial Law, 2012 Bar — Question 56

MULTIPLE CHOICE

AAA Corporation is a wholly owned subsidiary of BBB Corporation. To support the business of AAA Corporation, BBB Corporation agreed to give its corporate guarantee to the loan of AAA Corporation. What is required so that the corporate guarantee will be valid? A) It only requires the approval of the Board of Directors of BBB Corporation. B) The Articles of Incorporation must provide such power and be approved by the Board of Directors. C) Providing corporate guarantee to another corporation is a necessary exercise of power of a corporation. D) It would require both the approval of the Board of Directors and the stockholders on record.

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