Question 1

The Revised Act and the majority of states hold that the officers' and directors' test of the duty of diligence requires a director or officer to discharge her duties:

Accepted Answer

A) in good faith. 
B) with the care an ordinarily prudent person in a like position would exercise under similar circumstances. 
C) in a manner she reasonably believes to be in the best interests of the corporation. 
D) All of these. 
A) in good faith. 
B) with the care an ordinarily prudent person in a like position would exercise under similar circumstances. 
C) in a manner she reasonably believes to be in the best interests of the corporation. 
D) All of these.

Question 2

The board of directors generally manages the day-to-day affairs of the company.

Accepted Answer

A) True 
 B)False

Question 3

In some states and under the RMBCA, cumulative voting is permissive, not mandatory.

Accepted Answer

A) True 
 B)False

Question 4

The right of a shareholder to examine the books and records of the corporation is a valuable right.However, it may be denied if the shareholder:

Accepted Answer

A) seeks information to determine the financial condition of the corporation. 
B) desires to know the amount of executive salaries. 
C) seeks information to embarrass or cause loss to the corporation. 
D) desires the names and addresses of other shareholders. 
A) seeks information to determine the financial condition of the corporation. 
B) desires to know the amount of executive salaries. 
C) seeks information to embarrass or cause loss to the corporation. 
D) desires the names and addresses of other shareholders.

Question 5

Directors have the power to bind the corporation when acting individually rather than as a board.

Accepted Answer

A) True 
 B)False

Question 6

The board of directors appoints the officers of the corporation, who are agents of the corporation.

Accepted Answer

A) True 
 B)False

Question 7

Federal statutes prohibit officers and directors from purchasing or selling shares of their corporation's stock without adequately disclosing all material facts in their possession that may affect the stock's actual or potential value.

Accepted Answer

A) True 
 B)False

Question 8

The Revised Act requires that demand be made upon the board of directors to enforce the corporate right at issue in
all cases as a prerequisite to bringing a derivative suit.

Accepted Answer

A) True 
 B)False

Question 9

To whom does a large, publicly held corporation and its management have obligations?

Accepted Answer

A) The corporation's shareholders 
B) Its employees, customers, and suppliers 
C) Communities in which the corporation is located 
D) All of these. 
A) The corporation's shareholders 
B) Its employees, customers, and suppliers 
C) Communities in which the corporation is located 
D) All of these.

Question 10

Notice of a shareholders' meeting may be waived in writing.

Accepted Answer

A) True 
 B)False

Question 11

An officer cannot be removed without the shareholders voting to do so.

Accepted Answer

A) True 
 B)False

Question 12

The board of directors is delegated the power to manage the business of the corporation, which includes:

Accepted Answer

A) determining the capital structure and financial policy of the corporation. 
B) declaring the amount and type of dividends. 
C) formulating major management policy. 
D) All of these. 
A) determining the capital structure and financial policy of the corporation. 
B) declaring the amount and type of dividends. 
C) formulating major management policy. 
D) All of these.

Question 13

The officers determine the capital structure and financial policy of the corporation.

Accepted Answer

A) True 
 B)False

Question 14

OmegaByte Corp.has 1,000 shares of stock outstanding that are permitted to vote for directors.If OmegaByte Corp.permits cumulative voting, a minority shareholder would need to vote how many shares to elect one of three directors?

Accepted Answer

A) 251 
B) 501 
C) 751 
D) 334 
A) 251 
B) 501 
C) 751 
D) 334

Question 15

Cumulative voting is permitted so the majority of shareholders can keep control of the board of directors.

Accepted Answer

A) True 
 B)False

Question 16

Gerhardt is the president of the Speedway Bicycle Company.He also serves as a director of the Flexible Tire Company.It occurs to Gerhardt that both companies could benefit from a contract in which Flexible agrees to supply Speedway with tires for its bicycles.If Gerhardt wishes to negotiate a contract between Speedway and Flexible, which of the following is correct?

Accepted Answer

A) The contract will be void as a conflict of interest. 
B) In most states, the contract might be permitted if it is fair and reasonable to both corporations and if Gerhardt fully discloses all information relating to the transaction. 
C) The contract is a clear conflict of interest and will be avoidable by either company even with disclosure. 
D) None of these. 
A) The contract will be void as a conflict of interest. 
B) In most states, the contract might be permitted if it is fair and reasonable to both corporations and if Gerhardt fully discloses all information relating to the transaction. 
C) The contract is a clear conflict of interest and will be avoidable by either company even with disclosure. 
D) None of these.

Question 17

A proxy is effective until the shareholder revokes it.

Accepted Answer

A) True 
 B)False

Question 18

Assuming there are no provisions in the corporation's articles of incorporation or bylaws regarding quorum requirements, if there are 13 total directors of General Gonzo Corporation and the minimum number of directors are present to transact business, how many votes normally would be necessary for those present to act as a board?

Accepted Answer

A) 7 
B) 4 
C) 6 
D) 11 
A) 7 
B) 4 
C) 6 
D) 11

Question 19

If the board delegates to a committee its duty to select a new company president:

Accepted Answer

A) the members of that committee may be responsible individuals other than board members. 
B) the committee must be approved by the shareholders. 
C) the non-committee directors are relieved of liability for acts of the committee. 
D) the committee must consist of board members. 
A) the members of that committee may be responsible individuals other than board members. 
B) the committee must be approved by the shareholders. 
C) the non-committee directors are relieved of liability for acts of the committee. 
D) the committee must consist of board members.

Question 20

The nominating committee of the board of directors actually determines the board's membership because:

Accepted Answer

A) they are the only ones who can vote on this matter. 
B) virtually all shareholders who vote for directors do so through the use of a proxy, and the majority of shareholders who return their proxies vote as management advises. 
C) very few institutional investors exercise their right to vote their shares, so the choice of the nominating committee usually prevails. 
D) most individual investors exercise their right to vote their shares, and they tend to rely on the recommendation of the nominating committee. 
A) they are the only ones who can vote on this matter. 
B) virtually all shareholders who vote for directors do so through the use of a proxy, and the majority of shareholders who return their proxies vote as management advises. 
C) very few institutional investors exercise their right to vote their shares, so the choice of the nominating committee usually prevails. 
D) most individual investors exercise their right to vote their shares, and they tend to rely on the recommendation of the nominating committee.

Exam 35: Management Structure

The Revised Act and the majority of states hold that the officers' and directors' test of the duty of diligence requires a director or officer to discharge her duties:

The board of directors generally manages the day-to-day affairs of the company.

In some states and under the RMBCA, cumulative voting is permissive, not mandatory.

The right of a shareholder to examine the books and records of the corporation is a valuable right.However, it may be denied if the shareholder:

Directors have the power to bind the corporation when acting individually rather than as a board.

The board of directors appoints the officers of the corporation, who are agents of the corporation.

Federal statutes prohibit officers and directors from purchasing or selling shares of their corporation's stock without adequately disclosing all material facts in their possession that may affect the stock's actual or potential value.

The Revised Act requires that demand be made upon the board of directors to enforce the corporate right at issue in all cases as a prerequisite to bringing a derivative suit.

To whom does a large, publicly held corporation and its management have obligations?

Notice of a shareholders' meeting may be waived in writing.

An officer cannot be removed without the shareholders voting to do so.

The board of directors is delegated the power to manage the business of the corporation, which includes:

The officers determine the capital structure and financial policy of the corporation.

OmegaByte Corp.has 1,000 shares of stock outstanding that are permitted to vote for directors.If OmegaByte Corp.permits cumulative voting, a minority shareholder would need to vote how many shares to elect one of three directors?

Cumulative voting is permitted so the majority of shareholders can keep control of the board of directors.

A proxy is effective until the shareholder revokes it.

If the board delegates to a committee its duty to select a new company president:

The nominating committee of the board of directors actually determines the board's membership because:

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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