Question 1

To protect a shareholder's interest in the corporation, the law provides shareholders with certain enforcement rights.

Accepted Answer

A) True 
 B)False

Question 2

Directors may vote by proxy when they are not able to be present for a meeting.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

All of the following would constitute a "fundamental change" to the corporation EXCEPT:

Accepted Answer

A) an amendment to the articles of incorporation. 
B) a merger. 
C) a stock dividend. 
D) selling off 70% of the business assets. 
A) an amendment to the articles of incorporation. 
B) a merger. 
C) a stock dividend. 
D) selling off 70% of the business assets.

Question 5

Arthur is a shareholder of Rowson, Inc.He has evidence to suggest that its president/CEO has allowed the corporation to engage in acts that are ultra vires.Based upon this evidence, Arthur contacts an attorney and sues the corporation on behalf of the corporation.The lawsuit Arthur has filed is known as:

Accepted Answer

A) a direct suit. 
B) a derivative suit. 
C) a class action suit. 
D) an unauthorized suit. 
A) a direct suit. 
B) a derivative suit. 
C) a class action suit. 
D) an unauthorized suit.

Question 6

What are some of the matters involving fundamental changes in the corporation?

Accepted Answer

A) Amendments to articles of incorporation. 
B) Sale or lease of all or substantially all of the corporate assets not in the regular course of business. 
C) Mergers, consolidations, compulsory share exchanges. 
D) Dissolution. 
E) All of the above. 
A) Amendments to articles of incorporation. 
B) Sale or lease of all or substantially all of the corporate assets not in the regular course of business. 
C) Mergers, consolidations, compulsory share exchanges. 
D) Dissolution. 
E) All of the above.

Question 7

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 8

The remedy for a director's breach of fiduciary duty is:

Accepted Answer

A) a suit in equity by the corporation. 
B) a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach. 
C) a class action suit by the shareholders. 
D) Both (a) and (b). 
A) a suit in equity by the corporation. 
B) a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach. 
C) a class action suit by the shareholders. 
D) Both (a) and (b).

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Explain the reasons why the accountability of the management of a corporation is a cultural issue.

Accepted Answer

A relatively small number of large, publ

Question 11

Which of the following is untrue about a corporation's ratification of an act of an officer?

Accepted Answer

A) It applies to an authorized act of an officer. 
B) It relates back to the original transaction. 
C) It may be either express or implied from the corporation's acceptance of the contract's benefits. 
D) The corporation must have full knowledge of the facts in order to ratify the act. 
A) It applies to an authorized act of an officer. 
B) It relates back to the original transaction. 
C) It may be either express or implied from the corporation's acceptance of the contract's benefits. 
D) The corporation must have full knowledge of the facts in order to ratify the act.

Question 12

Restrictions on transfer of shares:

Accepted Answer

A) exist only for closely held corporations to control who may become shareholders. 
B) are valid under the common law if they are reasonable and adopted for a lawful purpose. 
C) are valid under the Revised Act if the restriction is conspicuously noted on the stock certificate. 
D) All of the above. 
E) Both (b) and (c). 
A) exist only for closely held corporations to control who may become shareholders. 
B) are valid under the common law if they are reasonable and adopted for a lawful purpose. 
C) are valid under the Revised Act if the restriction is conspicuously noted on the stock certificate. 
D) All of the above. 
E) Both (b) and (c).

Question 13

If Eilene, a shareholder, sues in a derivative suit, the judgment will be paid to:

Accepted Answer

A) the shareholders as a dividend. 
B) Eilene directly. 
C) the corporate treasury. 
D) the board of directors. 
A) the shareholders as a dividend. 
B) Eilene directly. 
C) the corporate treasury. 
D) the board of directors.

Question 14

Determining the names of other shareholders in order to communicate with them about corporate affairs is a "proper purpose" for a shareholder to inspect the books and records of a corporation.

Accepted Answer

A) True 
 B)False

Question 15

A proxy, voting trust, and shareholder agreement are similar in:

Accepted Answer

A) definition. 
B) duration. 
C) revocability. 
D) degree of formality required. 
E) All of the above. 
A) definition. 
B) duration. 
C) revocability. 
D) degree of formality required. 
E) All of the above.

Question 16

Claude is a shareholder in the Tel Ko Corporation.He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders.He cannot sue the corporation to enforce a right belonging to the corporation.

Accepted Answer

A) True 
 B)False

Question 17

Directors who are also officers or employees of a publicly held corporation are "affiliated directors."

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

A director may make business decisions in reliance on information provided to him by legal counsel or public accountants without incurring liability for negligence as long as he:

Accepted Answer

A) notifies the preparer of the information. 
B) reasonably believes that the matters are within the person's professional competence. 
C) conducts his own independent investigation. 
D) is given a sworn affidavit by the preparer. 
A) notifies the preparer of the information. 
B) reasonably believes that the matters are within the person's professional competence. 
C) conducts his own independent investigation. 
D) is given a sworn affidavit by the preparer.

Exam 36: Management Structure of Corporations

To protect a shareholder's interest in the corporation, the law provides shareholders with certain enforcement rights.

Directors may vote by proxy when they are not able to be present for a meeting.

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

All of the following would constitute a "fundamental change" to the corporation EXCEPT:

What are some of the matters involving fundamental changes in the corporation?

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

The remedy for a director's breach of fiduciary duty is:

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

Explain the reasons why the accountability of the management of a corporation is a cultural issue.

Which of the following is untrue about a corporation's ratification of an act of an officer?

Restrictions on transfer of shares:

If Eilene, a shareholder, sues in a derivative suit, the judgment will be paid to:

Determining the names of other shareholders in order to communicate with them about corporate affairs is a "proper purpose" for a shareholder to inspect the books and records of a corporation.

A proxy, voting trust, and shareholder agreement are similar in:

Claude is a shareholder in the Tel Ko Corporation.He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders.He cannot sue the corporation to enforce a right belonging to the corporation.

Directors who are also officers or employees of a publicly held corporation are "affiliated directors."

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

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

A director may make business decisions in reliance on information provided to him by legal counsel or public accountants without incurring liability for negligence as long as he:

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

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer

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

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

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