Exam 26: Corporate Governance: the Internal Affairs of Corporations

A shareholder who is not a director can operate a business that competes with the business of the company in which she or he is a shareholder.

Explain what it means for a director to give the corporation the right of first refusal.Give an example.

Martin is a newly elected director of the Alliance Corporation.After being told of what would be expected of him,he is not sure he wants the position.However,upon investigating,he finds out that the only thing he will be liable for is

Jacob is a minority shareholder in a closely held corporation.Recently he was dismissed from his marketing management position,and now the board of directors is stopping him from transferring his stock to a cousin.He has

In what circumstances is the appointment of the auditor of the corporation unnecessary?

Briefly describe how a minority shareholder can become "locked in" and "frozen out" as a result of the actions of the majority.

Notwithstanding legislation designed to impose duties on directors,why do you think that large corporations get away with breaches of duties and even fraud at the level of the directors and controlling shareholders,if any?

In a distributing public company,auditors are appointed by

The Delphi Corp.owns 60 percent of Lynden Sand & Gravel Inc.Delphi,with its voting power,elected all three directors on Lynden's board.Then the board decided to sell one of Lynden's gravel reserves to Delphi at only half its value.As a minority shareholder in the Lynden corporation,how have you been affected by this transaction?

The only "document of record" the company need NOT allow access to by the shareholders is

What are pre-emptive rights?

Jack is a director of Metallica,a construction corporation.During the course of his work as director of the corporation,Jack learns that the government is about to ask for tenders for the construction of a highway.If Jack resigns from his position as director and then sets up a new corporation that successfully bids for the government contract,he will not be in breach of his duty as a director.

Which of the following is NOT a statutory safeguard when considering disclosure?

Qualco Lumber Ltd.owned a timber license over 50 000 hectares of forest in British Columbia.The British Columbia government notified Qualco that it intends to cancel this valuable license.A director of Qualco immediately upon hearing of the cancellation sells all his shares.When would that director be liable for insider trading and when would he not?

Where a controlling group of majority shareholders propose fundamental changes to the corporation,a dissenting shareholder need not go along with the change.She may elect instead to have her shares bought out by the corporation at a fair price.This is referred to as

Originally,courts did not consider insider trading as harmful to the corporation and so it did not consider it a breach of the fiduciary duty owed to the corporation.

An agreement between two or more shareholders that is distinct from the corporation's charters and by-laws is referred to as a shareholder agreement.

A director who refuses to disclose his interest in another company at a directors meeting where the purchase of the other business is being voted on has committed a breach of trust.

To ensure the accuracy of financial statements,business corporation legislation provides for the appointment of an independent ________ by the shareholders.

If a corporation is profitable,directors must declare a dividend to holders of common shares according to their proportionate shareholding.