Exam 35: Management Structure of Corporations

Under the Revised Act and an increasing number of other statutes, by a majority vote, shareholders may remove the entire board of directors without cause.

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

MegaValue Corporation requires a quorum of five directors. If Branson, a director, shows up at the meeting for a vote on his favorite topic (dividends) and withdraws thereafter, leaving only four directors, they, under the Revised Act, may continue to act on further business that day, because the quorum was present at the beginning of the meeting.

In most states, but not under the Revised Act, cumulative voting is permissive and not mandatory.

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

The Rutherford Corporation, a publicly held company, has employed Duncan, Saindon & Associates, PSC, as their accounting firm to perform audit services. Under the Sarbanes-Oxley Act, the lead auditor of Duncan, Saindon & Associates must rotate every:

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

a. What is a quorum of the board of directors for purpose of conducting corporate business? What does the Revised Act say with regard to a quorum? What is a supermajority requirement? b. The directors of Bigkey, Inc. can't decide whether to declare a dividend, so the board appoints a committee consisting of the president of the corporation, the vice president of the corporation, and the treasurer to decide whether to pay a dividend. If the committee wants to declare a dividend, the directors say the officers can pay it immediately before the next board meeting. Is this a permissible delegation of corporate authority? Explain.

Theodore, as treasurer of Komand Corporation, had the duty to invest corporate earnings as he deemed best for the company. When Komand 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:

How does the management structure of a closely held corporation differ from that of a publicly traded corporation?

The officers and the directors are fiduciaries of the corporation, but the business judgment rule may preclude liability on officers and directors for honest mistakes of judgment.

Unissued shares and treasury stock must be counted to see if a quorum exists.

The Statutory Close Corporation Supplement has relaxed most of the nonessential corporate formalities.

A voting trust permits a concentration of corporate control in one or more persons.

Shareholders normally have the right to do all but which one of the following?

The Dodd-Frank Wall Street Reform and Consumer Protection Act:

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

If shareholders agree in writing to vote in a specified manner for election or removal of directors, this is known as:

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

The right of a shareholder to examine the books and records of the corporation may be denied if the shareholder: