Exam 28: Corporate Governance and the Sarbanes-Oxley Act

Self-dealing is a practice that allows directors and officers to fulfill their duty of loyalty.

The duty of care applies only to shareholders of an organization,and not directors.

The piercing the corporate veil doctrine is also called the alter ego doctrine because the corporation becomes the alter ego of the shareholder.

Which of the following is true of stock dividends?

Which of the following is true of a proxy?

A director or corporate officer who usurps a corporate opportunity would be in violation of ________.

The director of a corporation has ________.

Bluestone Oil invests its money in a drilling project that was predicted by industry experts to yield very profitable results.Unfortunately,the predictions failed and Bluestone Oil incurred massive losses due to the failure.Which of the following protects Bluestone Oil from litigation by its shareholders?

________ doctrine is a doctrine that says if a shareholder dominates a corporation and uses it for improper purposes,a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations.

Which of the following is true of a voting trust agreement drafted by shareholders of a corporation?

The business judgment rule states that directors and officers are personally liable to the corporation or its shareholders for honest mistakes of judgment.

Discuss the need for outside directors in the board of directors of a company.

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

Contrast the roles played by shareholders and directors.Which role is more significant with respect to a corporation?

A corporation has 10 outstanding shares.Andy owns 6 shares (60%),while Bill owns 4 (40%)shares of the company.Together they are to elect one director for the company from 10 candidates.Andy casts 6 votes for one candidate,while Bill casts 4 votes for another candidate.The candidate voted for by Andy wins by simple majority of votes and is elected director.This is an example of ________.

The Sarbanes-Oxley Act applies only to private companies.

Shareholders of a corporation are personally liable for the debts and obligations of the corporation.

Stephen,the chief of operations of an insurance company,accepts bribes in exchange of expediting paperwork regarding applications for certain insurance policies.In terms of the duty of loyalty,Stephen's behavior is an example of ________.

A system in which a shareholder accumulates all of his or her votes and votes them all for one candidate or splits them among several candidates is known as ________ voting.

An agreement that requires selling shareholders to sell their shares to the other shareholders or to the corporation at the price specified in the agreement is referred to as ________.