Question 1

Under the Revised Model Business Corporation Act,all corporate directors' terms are fixed at one year in length.

Accepted Answer

A) True 
 B)False

Question 2

Only those shareholders who own stock as of the record date may vote at a shareholders' meeting.

Accepted Answer

A) True 
 B)False

Question 3

The notice for which type(s)of shareholders' meetings must include the purpose of the meeting?

Accepted Answer

A)  annual meetings 
B)  special meetings 
C)  annual and special meetings 
D)  neither annual nor special meetings 
E)  annual meetings, but only if special business issues are discussed 
A)  annual meetings 
B)  special meetings 
C)  annual and special meetings 
D)  neither annual nor special meetings 
E)  annual meetings, but only if special business issues are discussed

Question 4

The doctrine by which a court can disregard the corporate entity and hold shareholders personally liable for the corporation's debts and obligations is called:

Accepted Answer

A)  "piercing the corporate façade." 
B)  "bursting the corporate veil." 
C)  "rejecting corporate formalities." 
D)  "piercing corporate formalities." 
E)  "piercing the corporate veil." 
A)  "piercing the corporate façade." 
B)  "bursting the corporate veil." 
C)  "rejecting corporate formalities." 
D)  "piercing corporate formalities." 
E)  "piercing the corporate veil."

Question 5

Unless otherwise provided for in the articles of incorporation,if a majority of shares entitled to vote are represented at a shareholder's meeting in person or by proxy,there is a quorum to hold the meeting.

Accepted Answer

A) True 
 B)False

Question 6

The Sarbanes-Oxley Act prohibits public companies from making personal loans to their directors or executive officers.

Accepted Answer

A) True 
 B)False

Question 7

The affirmative vote of the majority of the voting shares represented at a shareholders' meeting constitutes an act of the shareholders for actions other than for the election of directors.

Accepted Answer

A) True 
 B)False

Question 8

A corporation's shareholders own the corporation.

Accepted Answer

A) True 
 B)False

Question 9

All classes of common stock must have voting rights.

Accepted Answer

A) True 
 B)False

Question 10

Stock dividends are a distribution of corporate assets.

Accepted Answer

A) True 
 B)False

Question 11

What is the consequence of holding a special shareholders' meeting after giving proper notice to some,but not all,shareholders?

Accepted Answer

A)  All actions taken at the meeting are effective, unless one of the shareholders who did not receive notice objects. 
B)  Any actions that received enough overall shareholder support that they would have been approved even if the shareholders not receiving notice had attended and voted against them are effective, and all other actions are not effective. 
C)  The action can be made effective only through ratification by the board of directors. 
D)  All actions taken at the meeting are not effective. 
E)  All actions taken at the meeting are valid, unless a special meeting was involved, in which case all actions taken are invalid. 
A)  All actions taken at the meeting are effective, unless one of the shareholders who did not receive notice objects. 
B)  Any actions that received enough overall shareholder support that they would have been approved even if the shareholders not receiving notice had attended and voted against them are effective, and all other actions are not effective. 
C)  The action can be made effective only through ratification by the board of directors. 
D)  All actions taken at the meeting are not effective. 
E)  All actions taken at the meeting are valid, unless a special meeting was involved, in which case all actions taken are invalid.

Question 12

In general,when can a corporate officer be removed from position?

Accepted Answer

A)  only pursuant to a violation of the officer's employment contract 
B)  only if shareholders vote unanimously to remove the officer 
C)  any time the board believes removal would be in the best interests of the corporation 
D)  only for violation of the "business judgment" rule 
E)  only if both the board of directors and the shareholders vote unanimously to remove the officer 
A)  only pursuant to a violation of the officer's employment contract 
B)  only if shareholders vote unanimously to remove the officer 
C)  any time the board believes removal would be in the best interests of the corporation 
D)  only for violation of the "business judgment" rule 
E)  only if both the board of directors and the shareholders vote unanimously to remove the officer

Question 13

On the board of directors of a corporation,an outside director is a director who is not also an officer of the corporation.

Accepted Answer

A) True 
 B)False

Question 14

Once a quorum is present,the withdrawal of shares does not affect the quorum of the meeting.

Accepted Answer

A) True 
 B)False

Question 15

An agreement between shareholders that addresses how they will vote their shares in an upcoming election of the board of directors is called a(n):

Accepted Answer

A)  voting trust. 
B)  proxy. 
C)  voting agreement. 
D)  agency agreement. 
E)  quorum agreement. 
A)  voting trust. 
B)  proxy. 
C)  voting agreement. 
D)  agency agreement. 
E)  quorum agreement.

Question 16

Cumulative voting gives a minority shareholder a better opportunity to elect someone to the board of directors.

Accepted Answer

A) True 
 B)False

Question 17

Unless otherwise stated,a proxy is valid for eleven (11)months.

Accepted Answer

A) True 
 B)False

Question 18

Martin,Martina and Melvin are shareholders of Random Corporation.They each hold several hundred of the five thousand outstanding shares.The three enter into an agreement ensuring they will always vote against any attorney in a board of directors election,and vote against any plans to expand the corporation's business overseas.This agreement is:

Accepted Answer

A)  an enforceable voting agreement. 
B)  valid as to the overseas expansion, but invalid with respect to an attorney's election to the board. 
C)  invalid, because any such voting agreement is against public policy, since it limits a shareholder's right to vote freely on all matters. 
D)  invalid, because the voting agreement is contrary to the best interests of the corporation. 
E)  valid, if the board of directors approves it. 
A)  an enforceable voting agreement. 
B)  valid as to the overseas expansion, but invalid with respect to an attorney's election to the board. 
C)  invalid, because any such voting agreement is against public policy, since it limits a shareholder's right to vote freely on all matters. 
D)  invalid, because the voting agreement is contrary to the best interests of the corporation. 
E)  valid, if the board of directors approves it.

Question 19

Why did proponents of the Sarbanes-Oxley Act believe that the Act was needed,and will it result in more accurate reporting of financial results?

Accepted Answer

Proponents of the Sarbanes-Oxley Act bel

Question 20

Notice of a shareholders' meeting is required to be given for both annual and special meetings.

Accepted Answer

A) True 
 B)False

Exam 28: Corporate Governance and Sarbanes-Oxley Act

Under the Revised Model Business Corporation Act,all corporate directors' terms are fixed at one year in length.

Only those shareholders who own stock as of the record date may vote at a shareholders' meeting.

The notice for which type(s)of shareholders' meetings must include the purpose of the meeting?

The doctrine by which a court can disregard the corporate entity and hold shareholders personally liable for the corporation's debts and obligations is called:

Unless otherwise provided for in the articles of incorporation,if a majority of shares entitled to vote are represented at a shareholder's meeting in person or by proxy,there is a quorum to hold the meeting.

The Sarbanes-Oxley Act prohibits public companies from making personal loans to their directors or executive officers.

The affirmative vote of the majority of the voting shares represented at a shareholders' meeting constitutes an act of the shareholders for actions other than for the election of directors.

A corporation's shareholders own the corporation.

All classes of common stock must have voting rights.

Stock dividends are a distribution of corporate assets.

What is the consequence of holding a special shareholders' meeting after giving proper notice to some,but not all,shareholders?

In general,when can a corporate officer be removed from position?

On the board of directors of a corporation,an outside director is a director who is not also an officer of the corporation.

Once a quorum is present,the withdrawal of shares does not affect the quorum of the meeting.

An agreement between shareholders that addresses how they will vote their shares in an upcoming election of the board of directors is called a(n):

Cumulative voting gives a minority shareholder a better opportunity to elect someone to the board of directors.

Unless otherwise stated,a proxy is valid for eleven (11)months.

Why did proponents of the Sarbanes-Oxley Act believe that the Act was needed,and will it result in more accurate reporting of financial results?

Notice of a shareholders' meeting is required to be given for both annual and special meetings.

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