Which of the following explains the term "lack of mutual agency" of a corporation?
A)The liabilities of the corporation cannot be extended to the personal assets of the shareholder.
B)Shares of stock can be readily bought and sold by investors on the open market.
C)Shareholders are not authorized to sign contracts or make business commitments on behalf of the corporation.
D)Corporations pay income tax on corporate earnings, and shareholders pay personal income tax on corporate dividends and gains from sale of stock.

Question

Quizplus · Accepted Answer

Lack of mutual agency refers to the fact that shareholders cannot act as agents of the corporation and make binding business commitments on behalf of the corporation. This means that shareholders do not have the authority to sign contracts or make decisions that are legally binding for the corporation.

Which of the Following Explains the Term "Lack of Mutual