Question 1

With respect to the voting rights of shareholders, unless the articles of incorporation provide otherwise, a shareholder is entitled to:

Accepted Answer

A)  vote only at annual shareholder meetings. 
B)  one vote for every two shares of stock owned. 
C)  vote only in person and not by proxy. 
D)  vote at annual and special shareholder meetings with one vote for each share of stock he owns. 
A)  vote only at annual shareholder meetings. 
B)  one vote for every two shares of stock owned. 
C)  vote only in person and not by proxy. 
D)  vote at annual and special shareholder meetings with one vote for each share of stock he owns.

Question 2

Assume there are no provisions in the corporation's articles of incorporation or bylaws regarding quorum requirements. If there are 13 total directors of General Grain 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 3

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

Accepted Answer

A) True 
 B)False

Question 4

The board determines corporate policy in a number of areas, including:

Accepted Answer

A)  selecting and removing officers. 
B)  determining the corporation's capital structure. 
C)  initiating fundamental changes. 
D)  declaring dividends. 
E)  All of these. 
A)  selecting and removing officers. 
B)  determining the corporation's capital structure. 
C)  initiating fundamental changes. 
D)  declaring dividends. 
E)  All of these.

Question 5

Discuss the business judgment rule.

Accepted Answer

The business judgment rule precludes imp

Question 6

Directors, but not officers, may compete with the corporation in their own private business dealings.

Accepted Answer

A) True 
 B)False

Question 7

An officer or director's responsibility to exercise ordinary care and prudence in discharging duties is the:

Accepted Answer

A)  duty of good faith. 
B)  duty of diligence. 
C)  fiduciary duty. 
D)  duty of obedience. 
A)  duty of good faith. 
B)  duty of diligence. 
C)  fiduciary duty. 
D)  duty of obedience.

Question 8

While officers, as agents of a corporation, owe an agent's duty of obedience, diligence, and loyalty to the corporation, this is not true of directors.

Accepted Answer

A) True 
 B)False

Question 9

a. Ron wants to buy all of the stock of Quagmar, Inc. He approaches the officers and directors and offers to pay them $200 per share for each of the shares they hold. The officers and directors agree and then convince the majority of shareholders to sell their stock for $100 per share. Do the other stockholders have a cause of action against the officers and directors? Explain. 
b. Arthur, Bob, and Clark are three of the five board members of Krescent, Inc. One day they meet by chance for breakfast and decide to transact some corporate business while they are all together. If they decide to declare a dividend and to purchase another building for the corporation at this meeting, will their actions be binding on the corporation? Explain.

Accepted Answer

a. Yes. The officers and directors have

Question 10

In most states, an officer can be removed for no reason if the board decides to do so.

Accepted Answer

A) True 
 B)False

Question 11

The 1969 amendments to the MBCA, which were carried over to the Revised Act, tightened restrictions on closely held corporations.

Accepted Answer

A) True 
 B)False

Question 12

In which of the following areas does the board determine corporate policy?

Accepted Answer

A)  Selecting and removing officers. 
B)  Determining the corporation's capital structure. 
C)  Initiating fundamental changes and declaring dividends. 
D)  Setting management compensation. 
E)  All of these are determined by the board. 
A)  Selecting and removing officers. 
B)  Determining the corporation's capital structure. 
C)  Initiating fundamental changes and declaring dividends. 
D)  Setting management compensation. 
E)  All of these are determined by the board.

Question 13

The Revised Act authorizes the articles of incorporation to include a provision eliminating or limiting, with certain exceptions, the liability of a director to the corporation or its shareholders for any action he takes, or fails to take, as director. These limitations or exceptions, for which liability would not be affected, include:

Accepted Answer

A)  the amount of any financial benefit the director receives to which he is not entitled, such as a bribe, kickback, or profits from a usurped corporate opportunity. 
B)  an intentional infliction of harm on the corporation or the shareholders. 
C)  liability under Section 8.33 for unlawful distributions. 
D)  All of these are correct. 
A)  the amount of any financial benefit the director receives to which he is not entitled, such as a bribe, kickback, or profits from a usurped corporate opportunity. 
B)  an intentional infliction of harm on the corporation or the shareholders. 
C)  liability under Section 8.33 for unlawful distributions. 
D)  All of these are correct.

Question 14

Mel is a shareholder in the Kyto Corporation. He discovers evidence of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders.  Mel is allowed to bring this suit.

Accepted Answer

A) True 
 B)False

Question 15

A shareholders' written agreement, unlimited in duration, to vote in a specified manner for the election of directors is a voting trust.

Accepted Answer

A) True 
 B)False

Question 16

The directors of a corporation are expected to devote their full time to the corporation's affairs.

Accepted Answer

A) True 
 B)False

Question 17

Compare the respective roles of the officers, board of directors, and the shareholders of a corporation. Who runs the corporation? Explain your answer and give examples.

Accepted Answer

The officers of a corporation handle the

Question 18

Discuss whether officers and directors may entrust important work to others and their potential liability if they do.

Accepted Answer

Directors and officers are permitted to

Question 19

One difference between large, publicly held corporations and closely held corporations is that more of the shares of closely held corporations are held by institutional investors.

Accepted Answer

A) True 
 B)False

Question 20

Notice of a shareholder's meeting may be waived.

Accepted Answer

A) True 
 B)False

Exam 35: Management Structure of Corporations

With respect to the voting rights of shareholders, unless the articles of incorporation provide otherwise, a shareholder is entitled to:

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

The board determines corporate policy in a number of areas, including:

Discuss the business judgment rule.

Directors, but not officers, may compete with the corporation in their own private business dealings.

An officer or director's responsibility to exercise ordinary care and prudence in discharging duties is the:

While officers, as agents of a corporation, owe an agent's duty of obedience, diligence, and loyalty to the corporation, this is not true of directors.

In most states, an officer can be removed for no reason if the board decides to do so.

The 1969 amendments to the MBCA, which were carried over to the Revised Act, tightened restrictions on closely held corporations.

In which of the following areas does the board determine corporate policy?

Mel is a shareholder in the Kyto Corporation. He discovers evidence of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders. Mel is allowed to bring this suit.

A shareholders' written agreement, unlimited in duration, to vote in a specified manner for the election of directors is a voting trust.

The directors of a corporation are expected to devote their full time to the corporation's affairs.

Compare the respective roles of the officers, board of directors, and the shareholders of a corporation. Who runs the corporation? Explain your answer and give examples.

Discuss whether officers and directors may entrust important work to others and their potential liability if they do.

One difference between large, publicly held corporations and closely held corporations is that more of the shares of closely held corporations are held by institutional investors.

Notice of a shareholder's meeting may be waived.

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

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Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

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Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

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Accountants Legal Liability

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Introduction to Property Property Insurance Bailments and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

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