Exam 35: Management Structure

The Sarbanes-Oxley Act was passed in 2002 to seek to prevent corporate scandals by increasing corporate responsibility, creating new financial disclosure requirements, creating new criminal offenses, and creating an Accounting Oversight Board.

Voting trusts generally are effective for only one year.

An extension of a voting trust for an additional term binds only those shareholders that consent to the extension.

Under the statutes in most states, if Marilyn and George form a corporation with Marilyn as president and George as treasurer, Marilyn cannot also be corporate secretary.

Directors ordinarily serve until someone who wants the position calls for an election.

By law, a shareholder is always entitled to one vote for each share of stock that he owns.

Officers and directors of a corporation owe to the corporation the subordination of their self-interest to the interest of the corporation and owe constant loyalty to the corporation.This duty is the:

A shareholder may bring a derivative suit on behalf of the corporation and any recovery usually goes to the corporation's treasury, or a shareholder may bring a direct suit to enforce a claim he has against the corporation based on his ownership of shares and any recovery goes to the shareholder plaintiff.

Officers who trade on inside information must return their profits to the corporation.

Assuming no special provision in the articles of incorporation, special shareholder meetings may be called by:

The CFPA of 2010 requires that publicly held companies annually include a provision in their proxy statements for a binding shareholder vote on executive compensation.

One of the fiduciary duties of directors is the duty not to compete with the corporation.They may pursue their own business interest, but they may not:

Management can be offered shares of the corporation at favorable prices if other shareholders are excluded from that offer.

The officers and the directors are fiduciaries of the corporation, but the business judgment rule will not preclude liability on officers and directors for honest mistakes of judgment.

All of the following would constitute a "fundamental change" to the corporation EXCEPT:

A quorum will consist of a majority of shares entitled to vote if there are no provisions for any other number in the articles of incorporation.

Under the Model Act and in a majority of the states, a quorum of shareholders at an annual meeting may be not less than percent of the shares entitled to vote.

A shareholder may not vote without being at the shareholder meeting.

Members of the board of directors may not determine their own compensation.

Directors are elected at the annual meeting of shareholders.