Question

S1: Contracts between corporations with interlocking directors shall only be voidable, not void, because of the nominal interest of the director

S2: Management contracts shall be approved by 2/3 vote of the directors and stockholders of both managed and managing corporation
A. Only S1 is false
B. Both are true
C. Both are false
D. Only the first is true

Answer 1

The correct answer is option b. Contracts between corporations with interlocking directors are voidable, not void, and management contracts require approval from both the directors and stockholders of both corporations.

Step-by-step explanation:

The statement S1: Contracts between corporations with interlocking directors shall only be voidable, not void, because of the nominal interest of the directors is true.

This means that contracts between corporations that have directors who also serve as directors on the boards of other corporations are not automatically void, but can be voided by the parties involved if they choose.

The statement S2: Management contracts shall be approved by a 2/3 vote of the directors and stockholders of both the managed and managing corporation is also true.

This means that management contracts, which involve the management of one corporation by another, require approval from both the directors and stockholders of both the managed and managing corporation.