Question 1

A proxy is a vote that is mailed in,like an absentee ballot.

Accepted Answer

A) True 
 B)False

Question 2

Overall,directors get paid very little for the amount of work they perform.

Accepted Answer

A) True 
 B)False

Question 3

A public company instituted a clawback policy.What does this mean?

Accepted Answer

A) The company can require the CEO and CFO to reimburse the company for any bonus or profits they received from selling company stock within a year of the release of flawed financials. 
B) At least once every three years,companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives. 
C) The company is prohibited from expelling shareholders unless the firm pays a fair price for the minority stock and the expulsion has a legitimate business purpose. 
D) The company has decided that the compensation level of its executives is not in the company's best interests,so it reduces all executive pay levels by a certain percentage. 
A) The company can require the CEO and CFO to reimburse the company for any bonus or profits they received from selling company stock within a year of the release of flawed financials. 
B) At least once every three years,companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives. 
C) The company is prohibited from expelling shareholders unless the firm pays a fair price for the minority stock and the expulsion has a legitimate business purpose. 
D) The company has decided that the compensation level of its executives is not in the company's best interests,so it reduces all executive pay levels by a certain percentage.

Question 4

Quick Supply House breached a contract with MegaCorp.The breach resulted in the loss of a great deal of money to MegaCorp.The board of directors for MegaCorp vote not to sue the supply house since it believes the legal costs would be more than it would probably recover.If a group of shareholders wish to sue the supply house,this would

Accepted Answer

A) be a type of direct lawsuit. 
B) have to be a derivative lawsuit. 
C) be a settlement lawsuit. 
D) be an SEC lawsuit. 
A) be a type of direct lawsuit. 
B) have to be a derivative lawsuit. 
C) be a settlement lawsuit. 
D) be an SEC lawsuit.

Question 5

All of the following are shareholder rights EXCEPT

Accepted Answer

A) the right to manage the firm. 
B) the right to vote. 
C) the right to information. 
D) the right to dissent. 
A) the right to manage the firm. 
B) the right to vote. 
C) the right to information. 
D) the right to dissent.

Question 6

Veritas,Inc.is planning its annual shareholder meeting on June 15.The company

Accepted Answer

A) need not send notices of the meeting to shareholders since it is the regularly scheduled,annual meeting,which Veritas always holds on the third Thursday of June. 
B) must send notices to everyone who owns stock as of January 1. 
C) must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting. 
D) is not required to have an annual shareholders meeting if the company is listed only on the NYSE. 
A) need not send notices of the meeting to shareholders since it is the regularly scheduled,annual meeting,which Veritas always holds on the third Thursday of June. 
B) must send notices to everyone who owns stock as of January 1. 
C) must send notices to everyone who owns stock on the "record date," which can be no more than 70 days before the meeting. 
D) is not required to have an annual shareholders meeting if the company is listed only on the NYSE.

Question 7

The NYSE and NASDAQ both require that the members of the nominating committee be independent directors who are less likely to simply go along with whatever the CEO wants.

Accepted Answer

A) True 
 B)False

Question 8

The proceeds,if any,of a derivative lawsuit go to

Accepted Answer

A) the shareholders of the corporation. 
B) the shareholders who actually filed the lawsuit. 
C) the board of directors. 
D) the corporation. 
A) the shareholders of the corporation. 
B) the shareholders who actually filed the lawsuit. 
C) the board of directors. 
D) the corporation.

Question 9

Mariposa is a shareholder of Tuscan Corporation.If she is acting in good faith,under the Model Act she has the right to

Accepted Answer

A) inspect the company's accounting records. 
B) vote on a merger proposal. 
C) examine the company's minute book. 
D) All of these are correct. 
A) inspect the company's accounting records. 
B) vote on a merger proposal. 
C) examine the company's minute book. 
D) All of these are correct.

Question 10

Matt,a shareholder,can run for director by simply placing his name on the company's proxy statement.

Accepted Answer

A) True 
 B)False

Question 11

In a derivative lawsuit,the named plaintiff

Accepted Answer

A) is the corporation on whose behalf the lawsuit is filed. 
B) is the particular class of shareholders primarily injured by the wrong. 
C) consists of all the corporation's shareholders. 
D) is the board of directors for the corporation. 
A) is the corporation on whose behalf the lawsuit is filed. 
B) is the particular class of shareholders primarily injured by the wrong. 
C) consists of all the corporation's shareholders. 
D) is the board of directors for the corporation.

Question 12

The percentage increase in stock price appreciation and dividends is referred to as

Accepted Answer

A) net returns on invested capital. 
B) price/earnings ratio. 
C) total shareholder return. 
D) financial leverage ratio. 
A) net returns on invested capital. 
B) price/earnings ratio. 
C) total shareholder return. 
D) financial leverage ratio.

Question 13

Alberta is not employed by E-prise,Inc.but she is a member of E-prise's board of directors.Alberta is an outside director.

Accepted Answer

A) True 
 B)False

Question 14

Ev-R-Green Co. ,a private corporation,decides to sell substantially all of the company's assets.Under the Model Act and many state statutes,

Accepted Answer

A) the sole remedy for dissenting shareholders is to sell their stock on the stock exchange. 
B) the board must first get unanimous shareholder approval for this fundamental change. 
C) Ev-R-Green must buy back,at fair value,the stock of any shareholders who object to the decision. 
D) the company may buy back,at fair value,the stock of any shareholders who object to the decision or the shareholders who object may receive the right of first refusal to purchase corporate assets. 
A) the sole remedy for dissenting shareholders is to sell their stock on the stock exchange. 
B) the board must first get unanimous shareholder approval for this fundamental change. 
C) Ev-R-Green must buy back,at fair value,the stock of any shareholders who object to the decision. 
D) the company may buy back,at fair value,the stock of any shareholders who object to the decision or the shareholders who object may receive the right of first refusal to purchase corporate assets.

Question 15

A corporation is required to have at least one class of stock with voting rights.

Accepted Answer

A) True 
 B)False

Question 16

Under both state and federal law,a shareholder can generally revoke a proxy at any time.

Accepted Answer

A) True 
 B)False

Question 17

A corporation's obligation to voluntarily provide shareholders with financial information

Accepted Answer

A) depends on whether the company is publicly or privately held. 
B) depends on the requirements of the Model Business Corporation Act. 
C) is extensive and is carefully regulated by the SEC if the company is privately held. 
D) depends on the ruling of the board of directors. 
A) depends on whether the company is publicly or privately held. 
B) depends on the requirements of the Model Business Corporation Act. 
C) is extensive and is carefully regulated by the SEC if the company is privately held. 
D) depends on the ruling of the board of directors.

Question 18

Controlling shareholders have no fiduciary responsibility to minority shareholders.

Accepted Answer

A) True 
 B)False

Question 19

Meredith,a shareholder in Quarto,Inc. ,notified Quarto's board of directors that the corporation had been wronged and asked the board to bring a lawsuit in the corporation's name.In response to Meredith's demand,the board

Accepted Answer

A) can file suit on behalf of the corporation. 
B) can reject Meredith's demand or simply fail to respond. 
C) can appoint a Special Litigation Committee. 
D) can do any of these options. 
A) can file suit on behalf of the corporation. 
B) can reject Meredith's demand or simply fail to respond. 
C) can appoint a Special Litigation Committee. 
D) can do any of these options.

Question 20

Larry has owned $5,000 of stock in E-prise,Inc.for the past 18 months.Under SEC rules,Larry can require that one proposal be placed in the company's proxy statement to be voted on at the shareholder meeting.

Accepted Answer

A) True 
 B)False

Exam 35: Shareholder Rights

A proxy is a vote that is mailed in,like an absentee ballot.

Overall,directors get paid very little for the amount of work they perform.

A public company instituted a clawback policy.What does this mean?

All of the following are shareholder rights EXCEPT

Veritas,Inc.is planning its annual shareholder meeting on June 15.The company

The NYSE and NASDAQ both require that the members of the nominating committee be independent directors who are less likely to simply go along with whatever the CEO wants.

The proceeds,if any,of a derivative lawsuit go to

Mariposa is a shareholder of Tuscan Corporation.If she is acting in good faith,under the Model Act she has the right to

Matt,a shareholder,can run for director by simply placing his name on the company's proxy statement.

In a derivative lawsuit,the named plaintiff

The percentage increase in stock price appreciation and dividends is referred to as

Alberta is not employed by E-prise,Inc.but she is a member of E-prise's board of directors.Alberta is an outside director.

Ev-R-Green Co. ,a private corporation,decides to sell substantially all of the company's assets.Under the Model Act and many state statutes,

A corporation is required to have at least one class of stock with voting rights.

Under both state and federal law,a shareholder can generally revoke a proxy at any time.

A corporation's obligation to voluntarily provide shareholders with financial information

Controlling shareholders have no fiduciary responsibility to minority shareholders.

Meredith,a shareholder in Quarto,Inc. ,notified Quarto's board of directors that the corporation had been wronged and asked the board to bring a lawsuit in the corporation's name.In response to Meredith's demand,the board

Larry has owned $5,000 of stock in E-prise,Inc.for the past 18 months.Under SEC rules,Larry can require that one proposal be placed in the company's proxy statement to be voted on at the shareholder meeting.

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Consideration

Legality

Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Contract Termination

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Starting a Business: Llcs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

Bankruptcy

Securities Regulation

Antitrust

Consumer Protection

Environmental Law

Intellectual Property

Real Property and Landlord Tenant Law

Personal Property and Bailment

Planning for the Future: Wills, Trusts and Insurance

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