Eileen Is Considering Incorporating a Corporation Under the Canada Business

Multiple Choice

Eileen is considering incorporating a corporation under the Canada Business Corporations Act to carry on her toxic waste disposal business. She has heard that incorporation is a foolproof strategy to avoid personal liability for obligations of the business. Which of the following are TRUE?

A) Incorporation does reduce risk for shareholders by protecting them against liability for torts for which the corporation is liable.
B) Sophisticated creditors may demand that a shareholder guarantee a debt of the corporation with the result that the shareholder becomes liable for the debt as well.
C) Sometimes, at the request of a creditor, courts will disregard the separate legal existence of the corporation and impose liability on a shareholder.
D) Incorporation will generally shield shareholders for the claims of trade creditors and consumers.
E) all of the above