Paralegal Advanced Competency Exam (PACE) Practice Exam

Which type of business does an alien corporation typically operate as?

1. A domestic corporation with foreign branches

2. A foreign corporation conducting business in the U.S.

3. A corporation that only operates online

4. A non-governmental organization

The correct answer is: A foreign corporation conducting business in the U.S.

An alien corporation is defined as a corporation that is incorporated outside of the jurisdiction in which it is doing business. Therefore, when addressing the type of business an alien corporation typically operates as, it must be understood that it functions as a foreign corporation relative to the U.S. legal landscape. This means that an alien corporation is a foreign entity that conducts business within the United States but was established in another country. As such, it needs to comply with U.S. laws and regulations governing foreign corporations, such as registration requirements and relevant reporting. The distinction here is crucial: an alien corporation is not merely a domestic corporation with branches abroad, nor is it limited to just online operations, nor does it pertain to non-governmental organizations. Instead, option B highlights its status as a foreign corporation specifically conducting business within a U.S. jurisdiction, reflecting its nature accurately and in accordance with legal definitions.