Question 1

In certain instances of fraud,a court may "pierce the corporate veil" to hold the shareholders individually liable.

Accepted Answer

A) True 
 B)False

Question 2

Directors can use corporate funds and confidential information for personal advantage as long as they disclose that they are doing so.

Accepted Answer

A) True 
 B)False

Question 3

Lexy and Mort act as the incorporators for NuGame Corporation.After the first board of directors is chosen,subsequent directors are elected by a vote of NuGame's

Accepted Answer

A) board of directors. 
B) employees. 
C) officers. 
D) shareholders. 
A) board of directors. 
B) employees. 
C) officers. 
D) shareholders.

Question 4

A director can be elected by the other members of the board.

Accepted Answer

A) True 
 B)False

Question 5

Dave is an officer for Sweet Somethings Candies,Inc.In 2012,chocolate hearts were very popular.Acting within his managerial authority and the powers of the corporation,Dave signs a contract for an increase in chocolate heart production for 2013.In 2013 chocolate hearts do not sell well and Sweet Somethings Candies loses money.Dave is most likely

Accepted Answer

A) liable for breach of duty of care. 
B) liable for breach of duty of loyalty. 
C) none of the choices. 
D) liable for violation of the business judgment rule. 
A) liable for breach of duty of care. 
B) liable for breach of duty of loyalty. 
C) none of the choices. 
D) liable for violation of the business judgment rule.

Question 6

Guy is Hot Java Company's majority shareholder.Guy decides to sell his Hot Java stock.The sale will be an effective transfer of the control of the company.Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Accepted Answer

Yes.A single shareholder-or a few share-

Question 7

Great Gates,Inc.has a board of ten directors.Great Gates' bylaws do not state any quorum requirements.In most states,a quorum for Great Gates will be defined as

Accepted Answer

A) two directors. 
B) six directors. 
C) nine directors. 
D) ten directors. 
A) two directors. 
B) six directors. 
C) nine directors. 
D) ten directors.

Question 8

Shareholders do not need to approve fundamental changes affecting the corporation before the changes can be effected.

Accepted Answer

A) True 
 B)False

Question 9

Corporate officers can usually be removed by the board of directors without cause.

Accepted Answer

A) True 
 B)False

Question 10

RayAnn is a corporate officer for Timmy's Trees,Inc.As a corporate officer,RayAnn is

Accepted Answer

A) the head of the board of directors. 
B) involved in the day-to-day operations of Timmy's Trees. 
C) not involved in the day-to-day operations of Timmy's Trees. 
D) in charge of selecting members of the board of directors. 
A) the head of the board of directors. 
B) involved in the day-to-day operations of Timmy's Trees. 
C) not involved in the day-to-day operations of Timmy's Trees. 
D) in charge of selecting members of the board of directors.

Question 11

Shareholders own a corporation.

Accepted Answer

A) True 
 B)False

Question 12

Rosa and Sean are directors of Tech,Inc.Rosa's written authorization to Sean to vote Rosa's shares at a Tech shareholders' meeting is

Accepted Answer

A) a violation of the duty of care. 
B) a preemptive right. 
C) a proxy. 
D) a quorum. 
A) a violation of the duty of care. 
B) a preemptive right. 
C) a proxy. 
D) a quorum.

Question 13

Etta is a director of Trendy Stuff Corporation.Without informing Trendy,Etta goes into business with GR8 Things,Inc.,in competition with Trendy.Etta is li-able for breach of

Accepted Answer

A) no duty or rule 
B) the business judgment rule. 
C) the duty of care. 
D) the duty of loyalty. 
A) no duty or rule 
B) the business judgment rule. 
C) the duty of care. 
D) the duty of loyalty.

Question 14

Denise,Ervin,and Flem occupy the positions of directors on the board of Gallery Corporation.As directors,they may not

Accepted Answer

A) authorize major corporate policy decisions. 
B) decide to issue stock and bonds,and declare dividends. 
C) select and remove corporate officers. 
D) subordinate the corporation's welfare to their personal interests. 
A) authorize major corporate policy decisions. 
B) decide to issue stock and bonds,and declare dividends. 
C) select and remove corporate officers. 
D) subordinate the corporation's welfare to their personal interests.

Question 15

Mickey is a director of Fine Art Dealers,Inc.Mickey is trained in art valuation.Fine Art Dealers makes several purchases in which it pays too much money for artwork.Mickey approves all the transactions without reading the details.Mickey is most likely

Accepted Answer

A) liable for breach of the duty of care. 
B) not liable for breach of the duty of care. 
C) liable for breach of duty of loyalty. 
D) liable for violation of the business judgment rule. 
A) liable for breach of the duty of care. 
B) not liable for breach of the duty of care. 
C) liable for breach of duty of loyalty. 
D) liable for violation of the business judgment rule.

Question 16

Niche Stores,Inc.,must hold a shareholders' meeti

Accepted Answer

A) once a month. 
B) once a year. 
C) once every two years. 
D) only when it is called by the board of directors. 
A) once a month. 
B) once a year. 
C) once every two years. 
D) only when it is called by the board of directors.

Question 17

Thor Power Products Corporation permits its directors to be elected by cumulative voting.This

Accepted Answer

A) allows minority shareholders to be represented on the board 
B) assures directors that they will be selected by their peers 
C) guarantees Thor's executive officers of the final choice. 
D) ensures against persons who may "cloud" the corporate direction. 
A) allows minority shareholders to be represented on the board 
B) assures directors that they will be selected by their peers 
C) guarantees Thor's executive officers of the final choice. 
D) ensures against persons who may "cloud" the corporate direction.

Question 18

If a director fails to use a reasonable amount of supervision over corporate officers and employees,then the director can be held liable for negligence.

Accepted Answer

A) True 
 B)False

Question 19

Hiring corporate officers and determining their compensation are decisions that would be made by a corporation's board of directors.

Accepted Answer

A) True 
 B)False

Question 20

A corporate officer cannot act as an agent of the corporation.

Accepted Answer

A) True 
 B)False

Exam 25: Corporate Directors, officers, and Shareholders

In certain instances of fraud,a court may "pierce the corporate veil" to hold the shareholders individually liable.

Directors can use corporate funds and confidential information for personal advantage as long as they disclose that they are doing so.

Lexy and Mort act as the incorporators for NuGame Corporation.After the first board of directors is chosen,subsequent directors are elected by a vote of NuGame's

A director can be elected by the other members of the board.

Guy is Hot Java Company's majority shareholder.Guy decides to sell his Hot Java stock.The sale will be an effective transfer of the control of the company.Does Guy owe a duty to Hot Java or its minority shareholders in this situation?

Great Gates,Inc.has a board of ten directors.Great Gates' bylaws do not state any quorum requirements.In most states,a quorum for Great Gates will be defined as

Shareholders do not need to approve fundamental changes affecting the corporation before the changes can be effected.

Corporate officers can usually be removed by the board of directors without cause.

RayAnn is a corporate officer for Timmy's Trees,Inc.As a corporate officer,RayAnn is

Shareholders own a corporation.

Rosa and Sean are directors of Tech,Inc.Rosa's written authorization to Sean to vote Rosa's shares at a Tech shareholders' meeting is

Etta is a director of Trendy Stuff Corporation.Without informing Trendy,Etta goes into business with GR8 Things,Inc.,in competition with Trendy.Etta is li-able for breach of

Denise,Ervin,and Flem occupy the positions of directors on the board of Gallery Corporation.As directors,they may not

Mickey is a director of Fine Art Dealers,Inc.Mickey is trained in art valuation.Fine Art Dealers makes several purchases in which it pays too much money for artwork.Mickey approves all the transactions without reading the details.Mickey is most likely

Niche Stores,Inc.,must hold a shareholders' meeti

Thor Power Products Corporation permits its directors to be elected by cumulative voting.This

If a director fails to use a reasonable amount of supervision over corporate officers and employees,then the director can be held liable for negligence.

Hiring corporate officers and determining their compensation are decisions that would be made by a corporation's board of directors.

A corporate officer cannot act as an agent of the corporation.

The Legal and Constitutional Environment of Business

Courts and Alternative Dispute Resolution

Ethics and Business Decision Making

Tort Law

Intellectual Property

Internet Law,social Media,and Privacy

Criminal Law and Cyber Crime

Nature and Classification

Agreement in Traditional and E-Contracts

Consideration, capacity, and Legality

Defenses to Contract Enforceability

Third Party Rights and Discharge

Breach and Remedies

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Warranties and Product Liability

Negotiability, transferability, and Liability

Checks and Banking in the Digital Age

Secured Transactions

Creditors Rights and Bankruptcy

Agency Relationships

Employment Law

Sole Proprietorships, partnerships, and Limited Liability Companies

Corporate Formation, financing, and Termination

Investor Protection, insider Trading, and Corporate Governance

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, wills, and Trusts

Liability of Accountants and Other Professionals

International Law in a Global Economy

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