Exam 40: Corporate Directors, Officers, Shareholders

Gladys is a shareholder of Frozen Yogurt, Inc. As a shareholder, Gladys must approve

Tank is a director and the majority shareholder of Unique New Investment Corporation (UNIC). Tank buys, for $1,500, an option to purchase a tract of real estate for $50,000. Tank forms Vista Property, Inc., to hold the option. As the majority shareholder, and thus controlling director, of UNIC, Tank orders the firm to authorize the purchase of the land from Vista Property for $500,000. Tank then has Vista Property buy the land, sell it to UNIC, and loan the money to UNIC for the purchase at a 10 percent interest rate. Wim, a minority shareholder in UNIC, complains to UNIC's board, which takes no action. Wim files a suit against Tank on UNIC's behalf. Will Wim prevail Explain.

The ordinary rules of agency normally do not apply to the employment of corporate officers.

When a third party harms a corporation, only the shareholders can bring a suit in the corporation's name against that party.

Shareholders are personally liable for the debts of a corporation.

Rhea is a director of Spex Corporation, which makes and sells sunglasses and other eyewear. As a Spex director, Rhea sits on the board, which

Every shareholder is entitled to examine specified corporate records.

Fact Pattern 40-1A Ruben is a shareholder of Speed Bikes Company (SBC). When the direc¬tors fail to undertake an action to redress a wrong suffered by SBC, Ruben files a suit on the firm’s behalf. -Refer to Fact Pattern 40-1A. Ruben's suit is a shareholder's

Odell is a director of Price Rite, Inc. As a director, with respect to the corporation, Odell is

Reba is a director of Quantum Mechanix Corporation. Reba's rights, as a director, do not include a right to

Officers hire the directors and other executive employees.

Frawsty Corporation distributes beverages in the greater Northwest. Frawsty's board of directors can delegate some of its functions to

Dimitri is a director and shareholder of Equitable Corporation and of Four Square Products, Inc. A resolution comes before the Equitable board to compete with Four Square. What is Dimitri's responsibility

Heidi and Ian are directors and shareholders of Globe Software, Inc. Heidi's written authorization to Ian to vote Heidi's shares at a Globe shareholders' meeting is

Shareholders' meetings need not occur at any certain interval.

Directors have a right to participate in all board of directors' meetings.

In some states, obtaining the unanimous written consent of shareholders is a permissible alternative to holding a shareholders' meeting.

Committees of the board of directors focus on individual subjects.

Directors are entitled to use corporate funds for their personal advantage.

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