Question 1

Officers of a corporation typically can have which types of agency authority?

Accepted Answer

A)  express only 
B)  express and apparent only 
C)  express and implied only 
D)  implied and apparent only 
E)  express, implied and apparent 
A)  express only 
B)  express and apparent only 
C)  express and implied only 
D)  implied and apparent only 
E)  express, implied and apparent

Question 2

Generally,shareholders owe a fiduciary duty to other shareholders of the corporation.

Accepted Answer

A) True 
 B)False

Question 3

What is required to have a quorum to hold a shareholder's meeting?

Accepted Answer

A)  Unless otherwise provided in the articles of incorporation, if a majority of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
B)  Unless otherwise provided in the articles of incorporation, if two-thirds of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
C)  Unless otherwise provided in the articles of incorporation, if three-fourths of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
D)  Unless otherwise provided in the articles of incorporation, if a minority of shares entitled to vote is represented at the meeting in person or by proxy, there is a quorum. 
E)  Unless otherwise provided in the articles of incorporation, if one-fourth of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
A)  Unless otherwise provided in the articles of incorporation, if a majority of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
B)  Unless otherwise provided in the articles of incorporation, if two-thirds of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
C)  Unless otherwise provided in the articles of incorporation, if three-fourths of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum. 
D)  Unless otherwise provided in the articles of incorporation, if a minority of shares entitled to vote is represented at the meeting in person or by proxy, there is a quorum. 
E)  Unless otherwise provided in the articles of incorporation, if one-fourth of shares entitled to vote are represented at the meeting in person or by proxy, there is a quorum.

Question 4

Corporate officers are liable on an unauthorized contract if the corporation does not ratify it.

Accepted Answer

A) True 
 B)False

Question 5

Shareholders may vote by moxie; that is,they can appoint another person (the moxie)as their agent to vote at a shareholders' meeting.

Accepted Answer

A) True 
 B)False

Question 6

According to the Sarbanes-Oxley Act,the CEO and CFO of a public company must file a statement accompanying each annual and quarterly report certifying that the signing officer has reviewed the report,and that based on the officer's knowledge,the report does not contain any untrue statement of a material fact or omit to state a material fact that would make the statement misleading.

Accepted Answer

A) True 
 B)False

Question 7

Kathy is a director Blackout Incorporated.Blackout has decided to expand,and is looking for property in a particular county.Kathy owns a piece of property in that county that is exactly what Blackout is looking for.Kathy informs the other seven directors of the property,and tells them that she had purchased the property for $250,000 three years ago.Kathy abstains from the purchase decision,and the other seven directors vote to purchase the property for $750,000,which is the current fair market value of the property.If Mike,a shareholder of Blackout,files suit seeking to recover (for the sole benefit of the corporation)the $500,000 profit made by Kathy,what will be the likely outcome?

Accepted Answer

Directors are permitted to deal with the

Question 8

Directors and officers who intentionally act outside their authority are personally liable for any resulting damages caused to the corporation or its shareholders.

Accepted Answer

A) True 
 B)False

Question 9

The function of an audit committee is for public company employees,such as executive officers,to conduct an audit of the company.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true about a "buy-and-sell" agreement among corporate shareholders?

Accepted Answer

A)  They are most often entered into among shareholders of large, publicly-held corporations, since it is otherwise difficult to monitor the large number of stock transactions. 
B)  They always provide for the purchase of shares by the corporation, in the event a shareholder desires to sell shares. 
C)  They can provide for the sale of shares to either the corporation or to other shareholders at the price specified in the agreement. 
D)  They usually also contain an agreement for a voting trust. 
E)  They are enforceable, but only if the agreement provides for a fair price. 
A)  They are most often entered into among shareholders of large, publicly-held corporations, since it is otherwise difficult to monitor the large number of stock transactions. 
B)  They always provide for the purchase of shares by the corporation, in the event a shareholder desires to sell shares. 
C)  They can provide for the sale of shares to either the corporation or to other shareholders at the price specified in the agreement. 
D)  They usually also contain an agreement for a voting trust. 
E)  They are enforceable, but only if the agreement provides for a fair price.

Question 11

Which of the following is true about "supramajority" requirements?

Accepted Answer

A)  They can be required for voting, but not for quorums. 
B)  They can be required for either voting or for quorums, but such requirements must have been included in the original articles of incorporation. 
C)  They are automatically required for quorums of shareholders meetings, and voting at such meetings, when approving mergers, consolidations, or the sale of substantially all of the assets of the corporation. 
D)  They can be required for either voting or for quorums, and if the requirement is added in an amendment to the articles of incorporation or corporate bylaws, the vote approving the amendment must pass by the same supramajority as the new supramajority requirements contained in the amendment being voted on. 
E)  They can be required for either voting or for quorums, and if the requirement is added in an amendment, a simple majority vote approving the amendment is all that is required for the amendment to become effective. 
A)  They can be required for voting, but not for quorums. 
B)  They can be required for either voting or for quorums, but such requirements must have been included in the original articles of incorporation. 
C)  They are automatically required for quorums of shareholders meetings, and voting at such meetings, when approving mergers, consolidations, or the sale of substantially all of the assets of the corporation. 
D)  They can be required for either voting or for quorums, and if the requirement is added in an amendment to the articles of incorporation or corporate bylaws, the vote approving the amendment must pass by the same supramajority as the new supramajority requirements contained in the amendment being voted on. 
E)  They can be required for either voting or for quorums, and if the requirement is added in an amendment, a simple majority vote approving the amendment is all that is required for the amendment to become effective.

Question 12

Shareholders must attend a shareholders' meeting to vote.

Accepted Answer

A) True 
 B)False

Question 13

The same individual may simultaneously hold more than one office in a corporation.

Accepted Answer

A) True 
 B)False

Question 14

If adequate notice is not given of a shareholders' meeting,the actions at that meeting are void.Should this be true if the votes of the shareholders not receiving notice would not have made a difference in the outcome of any elections?

Accepted Answer

Even if only one shareholder owning ten

Question 15

What right does a shareholder have to inspect the books and records of a corporation?

Accepted Answer

A)  The shareholder has an absolute right to inspect the articles of incorporation, shareholder list, bylaws and minutes of shareholders' meetings within the past three years, and a limited right to inspect other records. 
B)  The shareholder has an absolute right to inspect all books and records of the corporation. 
C)  The shareholder has a limited right to inspect all books and records of the corporation. 
D)  The shareholder has a general right to inspect all books and records, but only under the strict supervision of the board of directors. 
E)  The shareholder has no right to inspect such documents, unless the corporate bylaws specifically grant such a right. 
A)  The shareholder has an absolute right to inspect the articles of incorporation, shareholder list, bylaws and minutes of shareholders' meetings within the past three years, and a limited right to inspect other records. 
B)  The shareholder has an absolute right to inspect all books and records of the corporation. 
C)  The shareholder has a limited right to inspect all books and records of the corporation. 
D)  The shareholder has a general right to inspect all books and records, but only under the strict supervision of the board of directors. 
E)  The shareholder has no right to inspect such documents, unless the corporate bylaws specifically grant such a right.

Question 16

The determination of whether a corporate director or officer has met his or her duty of care is measured as of the time the decision is made; the benefit of hindsight is not a factor.

Accepted Answer

A) True 
 B)False

Question 17

Corporate officers are responsible for the corporation's day-to-day operations.

Accepted Answer

A) True 
 B)False

Question 18

A corporation's board of directors has the authority to appoint the officers of the corporation.

Accepted Answer

A) True 
 B)False

Question 19

State law provides that existing shareholders may buy new issues of stock in the same proportion as their current holdings.This is done to allow current stockholders to keep the same voting and dividend rights they had before the new stock issue.This right is known as the right of:

Accepted Answer

A)  redemption. 
B)  ratification. 
C)  preemption. 
D)  first refusal. 
E)  buy-sell. 
A)  redemption. 
B)  ratification. 
C)  preemption. 
D)  first refusal. 
E)  buy-sell.

Question 20

The board of directors of a corporation is appointed by the executives of the corporation.

Accepted Answer

A) True 
 B)False

Exam 28: Corporate Governance and Sarbanes-Oxley Act

Officers of a corporation typically can have which types of agency authority?

Generally,shareholders owe a fiduciary duty to other shareholders of the corporation.

What is required to have a quorum to hold a shareholder's meeting?

Corporate officers are liable on an unauthorized contract if the corporation does not ratify it.

Shareholders may vote by moxie; that is,they can appoint another person (the moxie)as their agent to vote at a shareholders' meeting.

Directors and officers who intentionally act outside their authority are personally liable for any resulting damages caused to the corporation or its shareholders.

The function of an audit committee is for public company employees,such as executive officers,to conduct an audit of the company.

Which of the following is true about a "buy-and-sell" agreement among corporate shareholders?

Which of the following is true about "supramajority" requirements?

Shareholders must attend a shareholders' meeting to vote.

The same individual may simultaneously hold more than one office in a corporation.

If adequate notice is not given of a shareholders' meeting,the actions at that meeting are void.Should this be true if the votes of the shareholders not receiving notice would not have made a difference in the outcome of any elections?

What right does a shareholder have to inspect the books and records of a corporation?

The determination of whether a corporate director or officer has met his or her duty of care is measured as of the time the decision is made; the benefit of hindsight is not a factor.

Corporate officers are responsible for the corporation's day-to-day operations.

A corporation's board of directors has the authority to appoint the officers of the corporation.

State law provides that existing shareholders may buy new issues of stock in the same proportion as their current holdings.This is done to allow current stockholders to keep the same voting and dividend rights they had before the new stock issue.This right is known as the right of:

The board of directors of a corporation is appointed by the executives of the corporation.

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