Question 1

The members of the board of directors are essentially trustees of the corporation.

Accepted Answer

A) True 
 B)False

Question 2

Discuss the business judgment rule.

Accepted Answer

The business judgment rule precludes imp

Question 3

Ace Corporation requires a quorum of five directors.Under the RMBCA if Pam, a director, shows up at the
meeting for a vote on her favorite topic, dividends, and withdraws thereafter leaving only four directors, they may not act on any further business.

Accepted Answer

A) True 
 B)False

Question 4

Theodore, as treasurer of Valleyview Corporation, had the duty to invest corporate earnings as he deemed best for the company.When Valleyview Corporation went public, the new board decided that a committee of the officers would make such investment decisions.If Theodore thereafter unilaterally contracted to purchase investment securities with corporate earnings as he had done many times before, such contract would be valid:

Accepted Answer

A) since Theodore would have express authority. 
B) since Theodore had implied authority. 
C) under apparent authority if the seller knew of Theodore's past transactions. 
D) because of ratification if the board did not know of his actions. 
A) since Theodore would have express authority. 
B) since Theodore had implied authority. 
C) under apparent authority if the seller knew of Theodore's past transactions. 
D) because of ratification if the board did not know of his actions.

Question 5

In closely held corporations, stock transfer restrictions are used to achieve the corporate equivalent of delectus personae.

Accepted Answer

A) True 
 B)False

Question 6

A voting trust does not permit a concentration of corporate control in one person.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an established right of a shareholder?

Accepted Answer

A) The right to vote 
B) The right to inspect the books of the corporation 
C) The right to participate directly in the management of the corporation 
D) The right to bring lawsuits to enforce their rights 
A) The right to vote 
B) The right to inspect the books of the corporation 
C) The right to participate directly in the management of the corporation 
D) The right to bring lawsuits to enforce their rights

Question 8

Marjorie is a member of the board of directors of Techno Ko Corp.She would like to have the corporation lend her some money so that she can begin another business venture.Which of the following is correct regarding loans of a corporation to one of its directors?

Accepted Answer

A) The Model Act permits a corporation to lend money to its directors with a majority vote of the other directors. 
B) The Sarbanes-Oxley Act prohibits any publicly held corporation from making personal loans to its directors or executive officers, with certain limited exceptions. 
C) Both the Model Act and the Revised Act prohibit loans to directors in all cases. 
D) The Sarbanes-Oxley Act permits a publicly held corporation to make personal loans to its directors or executive officers only with the consent of the shareholders. 
A) The Model Act permits a corporation to lend money to its directors with a majority vote of the other directors. 
B) The Sarbanes-Oxley Act prohibits any publicly held corporation from making personal loans to its directors or executive officers, with certain limited exceptions. 
C) Both the Model Act and the Revised Act prohibit loans to directors in all cases. 
D) The Sarbanes-Oxley Act permits a publicly held corporation to make personal loans to its directors or executive officers only with the consent of the shareholders.

Question 9

Which of the following are directors in publicly held corporations?

Accepted Answer

A) Inside directors 
B) Outside directors 
C) Affiliated directors 
D) Any of these. 
A) Inside directors 
B) Outside directors 
C) Affiliated directors 
D) Any of these.

Question 10

Which of the following would be likely to result in liability to a director of a textile company? The director:

Accepted Answer

A) sells stock in the textile company before a merger is announced. 
B) buys stock in the textile company using the computer in the office of the company. 
C) owns stock in an automobile company. 
D) agrees to hire as president a man he has not personally investigated. 
A) sells stock in the textile company before a merger is announced. 
B) buys stock in the textile company using the computer in the office of the company. 
C) owns stock in an automobile company. 
D) agrees to hire as president a man he has not personally investigated.

Question 11

George is a shareholder in the Muncy Kempf Corporation.He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders.A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

Accepted Answer

A) True 
 B)False

Question 12

Under the RMBCA, if a quorum exists, a shareholder action such as the election of directors is approved if the votes cast for the action exceed the votes cast against it.

Accepted Answer

A) True 
 B)False

Question 13

Zeron Corporation stock may be summarized as follows: 100,000 authorized
90,000 issued
75,000 outstanding
15,000 treasury stock
How many shares or proxies will have to be present for a quorum (assuming no special provision and that the
Revised Act is not in effect)?

Accepted Answer

A) 45,001 
B) 37,501 
C) 30,001 
D) 50,001 
A) 45,001 
B) 37,501 
C) 30,001 
D) 50,001

Question 14

Only the board of directors may approve fundamental changes in the corporation.

Accepted Answer

A) True 
 B)False

Question 15

Assume that 12,000 shares are represented at a shareholder meeting and a quorum exists.How many votes are normally necessary to carry a motion?

Accepted Answer

A) 4,001 
B) 8,001 
C) 6,001 
D) 10,000 
A) 4,001 
B) 8,001 
C) 6,001 
D) 10,000

Question 16

Under the Sarbanes-Oxley Act, the audit committee of every publicly held corporation has direct responsibility for the appointment, compensation, and oversight of the work of the public accounting firm employed by the corporation to perform audit services.

Accepted Answer

A) True 
 B)False

Question 17

Morales, president of Tradewind Industries, Inc., would have actual implied authority to:

Accepted Answer

A) issue corporate stock. 
B) remove a vice-president of the company from office. 
C) bind the company in a sale in the ordinary course of the company business. 
D) set the amount for production bonuses of the other officers. 
A) issue corporate stock. 
B) remove a vice-president of the company from office. 
C) bind the company in a sale in the ordinary course of the company business. 
D) set the amount for production bonuses of the other officers.

Question 18

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation may operate without a board of directors.

Accepted Answer

A) True 
 B)False

Question 19

The minimum number of board members necessary to be present at a meeting in order to transact business is known as:

Accepted Answer

A) a plurality. 
B) the entire board of directors. 
C) a quorum. 
D) a minority. 
A) a plurality. 
B) the entire board of directors. 
C) a quorum. 
D) a minority.

Question 20

What is the role of shareholders in managing the corporation?

Accepted Answer

A) Election of directors 
B) Approval of corporate transactions that are void or avoidable unless ratified 
C) Right to bring enforcement suits 
D) All of these 
A) Election of directors 
B) Approval of corporate transactions that are void or avoidable unless ratified 
C) Right to bring enforcement suits 
D) All of these

Exam 35: Management Structure

The members of the board of directors are essentially trustees of the corporation.

Discuss the business judgment rule.

Ace Corporation requires a quorum of five directors.Under the RMBCA if Pam, a director, shows up at the meeting for a vote on her favorite topic, dividends, and withdraws thereafter leaving only four directors, they may not act on any further business.

In closely held corporations, stock transfer restrictions are used to achieve the corporate equivalent of delectus personae.

A voting trust does not permit a concentration of corporate control in one person.

Which of the following is not an established right of a shareholder?

Marjorie is a member of the board of directors of Techno Ko Corp.She would like to have the corporation lend her some money so that she can begin another business venture.Which of the following is correct regarding loans of a corporation to one of its directors?

Which of the following are directors in publicly held corporations?

Which of the following would be likely to result in liability to a director of a textile company? The director:

George is a shareholder in the Muncy Kempf Corporation.He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders.A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

Under the RMBCA, if a quorum exists, a shareholder action such as the election of directors is approved if the votes cast for the action exceed the votes cast against it.

Zeron Corporation stock may be summarized as follows: 100,000 authorized 90,000 issued 75,000 outstanding 15,000 treasury stock How many shares or proxies will have to be present for a quorum (assuming no special provision and that the Revised Act is not in effect)?

Only the board of directors may approve fundamental changes in the corporation.

Assume that 12,000 shares are represented at a shareholder meeting and a quorum exists.How many votes are normally necessary to carry a motion?

Under the Sarbanes-Oxley Act, the audit committee of every publicly held corporation has direct responsibility for the appointment, compensation, and oversight of the work of the public accounting firm employed by the corporation to perform audit services.

Morales, president of Tradewind Industries, Inc., would have actual implied authority to:

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation may operate without a board of directors.

The minimum number of board members necessary to be present at a meeting in order to transact business is known as:

What is the role of shareholders in managing the corporation?

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature, Formation, and Powers

Financial Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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