Exam 20: Directors, Officers, and Controlling Shareholders

Which of the following is true in regard to the business judgment rule if one or more individual directors have a personal interest in a transaction being considered by the board?

A shareholder derivative action is a suit brought by a shareholder on behalf of the corporation.

A shareholder who owns sufficient shares to outvote the other shareholders,or to otherwise set corporate policy,and thus to control the corporation is known as a _______ shareholder.

Fact Pattern 20-1 Tonya is the president of Big Corporation. Big Corporation is looking for land on which to build a new facility. Tonya locates suitable land, but purchases it for herself with plans to sell it at a profit at a later date. Rick, the majority shareholder of Big Corporation hears about Tonya's purchase and complains to her about it. She tells Rick that she viewed and purchased the land on her own time and that she did not breach any duties owed to the corporation. Rick tells her that she should reconsider and that he plans to discuss the matter with the rest of the board. -Refer to fact pattern 20-1. Did Tonya violate any duties owed to the corporation?

What is greenmail? What is a standstill agreement? When,if ever,is the process of greenmail protected by the business judgment rule?

The ________ requires that officers and directors not take personal advantage of a desirable business investment that rightfully belongs to the corporation.

Which of the following is true regarding any duties of controlling shareholders in relation to control of a corporation?

Which of the following was the result in the case in the text from the Delaware Court of Chancery involving a dead-hand pill under Delaware law?

What is required by the Sarbanes-Oxley Act of 2002 in regard to the certification of the accuracy of public companies' SEC filings and the adequacy of internal controls?

What is a poison pill? What factors favor keeping a poison pill in place?

In a _______,someone wishing to replace the board with his or her own candidates attempts to acquire a sufficient number of shareholder votes to do so through limited written powers of attorney entitling the holder to vote the shares owned by the person giving the power of attorney.

The Securities and Exchange Commission recognizes the affirmative responsibility of officers and directors under federal securities laws to ensure the accuracy and completeness of public company filings with the SEC.

Under no circumstances do controlling shareholders owe fiduciary duties to other shareholders.

Once a sale or breakup of the corporation is inevitable,directors have a fiduciary duty to prevent a freeze out of the majority shareholders.

A shareholder derivative suit is a lawsuit by

Which of the following was the result on appeal in the case in the text Omnicare,Inc.v.NCS Healthcare,Inc.,involving whether directors of an insolvent publicly traded company violated their fiduciary duty when they entered into an agreement for the sale of the company to a particular interested buyer regardless of other offers?

A poison pill is a defensive measure that would make any takeover not approved by the directors prohibitively expensive.

Some jurisdictions permit the shareholders to amend the articles of incorporation to relieve directors of any financial liability for violations of the duty of

Which of the following is true regarding breakup fees?

Yolanda,a ballroom dance instructor,was recently asked to be a director of ABC Company which is publicly traded. She is very honored and excited. Her friend,Joe,asked her if she had any experience in accounting,business,or SEC requirements. Yolanda told him no,but that the president of ABC had assured her that the only responsibility of a director was acting as a figurehead because the officers took care of all detailed corporate business. Yolanda says that she is accepting the position because it will get her exposure in the community and perhaps increase her dance clientele. Is Yolanda correct regarding her responsibilities,and why or why not?