Exam 47: Management of Corporations

A valid meeting of the voting shareholders of a corporation requires the presence of a: ______.

The Dodd-Frank Act requires greater accountability by the board of directors to the shareholders, including all of the following except:

Directors are usually allowed to vote by proxy.

Most states permit action to be taken by the board of directors without holding an actual meeting.

Under the responsible corporate officer doctrine officers and directors are not personally responsible for crimes they have committed when it can be demonstrated that in carrying out such crimes, they acted on behalf of the corporation.

Generally, corporate management is not liable to third persons if the managerial policies cause loss to such third persons.

The duties of officers of a corporation are generally set forth in the articles of incorporation.

State laws that attempt to indemnify corporate directors against personal monetary liability for gross negligence are void as contrary to public policy.

Application of the business judgment rule to a board's decision presumes all of the following except: ______.

Shareholder control is generally limited to voting at shareholders' meetings to elect directors.

Eligibility for membership on a board of directors is determined by all of the following except: ______.

Under the Dodd-Frank Act's "say-on-pay" rule, public company shareholders have the right to a nonbinding vote to approve or disapprove executive compensation.

Shareholders indirectly determine the management policies of the business.

The __________ rule allows management immunity from liability for corporate acts where there is a reasonable indication that the acts were made in good faith and with due care.

When a meeting opens with a quorum, the quorum is broken if shareholders leave and those remaining are not sufficient to constitute a quorum.

Corporations may ________ officers, directors, employees, and agents when they act in good faith, in a manner not opposed to corporate interests and with no reason to believe their conduct was unlawful.

The president of a business corporation does not have implied authority to execute commercial paper in the name of the corporation.

Generally, a President of a corporation does not have the authority to do any of the following except:

All of the directors of the XYZ Corporation were present at a meeting called on a Monday evening at 9 p.m. Meetings normally were held on Friday evenings at 6 p.m. At the Monday meeting, a report was made indicating that an agent of the corporation was having difficulties formalizing a contract in a foreign country. The report indicated that if funds were made available to a local political figure, the contract the company desired would be obtained. The directors unanimously voted to forward the necessary funds for this operation to the agent. An action was later commenced against the directors, alleging illegal activities. In response, the directors argue that: (1) no illegal activity had occurred; (2) if an illegal activity did occur, it was not at a valid meeting of the corporation and was therefore not an official action of the board; and (3) if they had to legally defend themselves, they would seek reimbursement from the corporation. Discuss the directors' contentions.

Absent a showing of fraud, generally courts will not 'second guess' directors' right to manage the company.