Question 1

Some publicly held corporations have used supermajority shareholder voting requirements to defend against hostile takeover bids.

Accepted Answer

A) True 
 B)False

Question 2

The articles of incorporation,incorporation statute,and bylaws set the number of directors.

Accepted Answer

A) True 
 B)False

Question 3

In most states,an officer can be removed for no reason if the board decides to do so.

Accepted Answer

A) True 
 B)False

Question 4

A shareholder has no right to dissent from compulsory share exchanges.

Accepted Answer

A) True 
 B)False

Question 5

Assume there are no provisions in the corporation's articles of incorporation or bylaws regarding quorum requirements.If there are 13 total directors of General Grain Corporation and the minimum number of directors are present to transact business,how many votes normally would be necessary for those present to act as a board?

Accepted Answer

A) 7 
B) 4 
C) 6 
D) 11 
A) 7 
B) 4 
C) 6 
D) 11

Question 6

The board determines corporate policy in a number of areas,including:

Accepted Answer

A) selecting and removing officers. 
B) determining the corporation's capital structure. 
C) initiating fundamental changes. 
D) declaring dividends. 
E) All of the above. 
A) selecting and removing officers. 
B) determining the corporation's capital structure. 
C) initiating fundamental changes. 
D) declaring dividends. 
E) All of the above.

Question 7

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 8

Voting trusts generally are effective for one year.

Accepted Answer

A) True 
 B)False

Question 9

In which of the following areas does the board determine corporate policy?

Accepted Answer

A) Selecting and removing officers. 
B) Determining the corporation's capital structure. 
C) Initiating fundamental changes and declaring dividends. 
D) Setting management compensation. 
E) All of the above. 
A) Selecting and removing officers. 
B) Determining the corporation's capital structure. 
C) Initiating fundamental changes and declaring dividends. 
D) Setting management compensation. 
E) All of the above.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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 12

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

Accepted Answer

A) Elect the directors. 
B) Elect the officers. 
C) Approve the sale of a major division. 
D) Meet at least once a year. 
A) Elect the directors. 
B) Elect the officers. 
C) Approve the sale of a major division. 
D) Meet at least once a year.

Question 13

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 14

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:

Accepted Answer

A) since Theodore would have express authority. 
B) since Theodore had implied authority. 
C) under apparent authority if the seller knew of Theodore's past transactions. 
D) because of ratification if the board did not know of his actions. 
A) since Theodore would have express authority. 
B) since Theodore had implied authority. 
C) under apparent authority if the seller knew of Theodore's past transactions. 
D) because of ratification if the board did not know of his actions.

Question 15

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.A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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 60% of the business assets not in the regular course of business. 
A) an amendment to the articles of incorporation. 
B) a merger. 
C) a stock dividend. 
D) selling off 60% of the business assets not in the regular course of business.

Question 18

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Accepted Answer

A) notifies the preparer of the information. 
B) reasonably believes that the information is reliable. 
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 information is reliable. 
C) conducts his own independent investigation. 
D) is given a sworn affidavit by the preparer.

Exam 35: Management Structure of Corporations

Some publicly held corporations have used supermajority shareholder voting requirements to defend against hostile takeover bids.

The articles of incorporation,incorporation statute,and bylaws set the number of directors.

In most states,an officer can be removed for no reason if the board decides to do so.

A shareholder has no right to dissent from compulsory share exchanges.

The board determines corporate policy in a number of areas,including:

Voting trusts generally are effective for one year.

In which of the following areas does the board determine corporate policy?

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

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

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

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

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.A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

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

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

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Introduction to Law

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Constitutional Law

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Intentional Torts

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Introduction to Contracts

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