Exam 37: Corporate Governance and the Sarbanes-Oxley Act

Persons who are shareholders on the record date are entitled to receive the dividend, even if they sell their shares before the payment date.

A corporation cannot ratify an unauthorized act committed by its corporate officer.

Once the number of board of directors is fixed by the articles of incorporation, the number cannot be amended.

Describe the doctrine of piercing the corporate veil.

Courts may pierce the corporate veil if ________.

Which of the following is considered an absolute power of corporate directors?

The board of director's right to inspection can be limited by bylaws.

Which of the following is true of the board of directors of a corporation?

A duty that directors and officers have not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders is known as ________.

Which of the following policies prevents a corporate officer from being sued for honest mistakes made on behalf of a corporation?

The piercing the corporate veil doctrine is also called the alter ego doctrine because it may be used when the corporation becomes the alter ego of the shareholder.

Bilkis Brands has 20,000 outstanding shares with four shareholders. Ester owns 9,000 shares, Mendez owns 4,000 shares, Judy owns 4,000 shares, and Aaron owns 3,000 shares. Assume that two directors of the corporation are to be elected from a potential pool of five candidates. Ester is in favor of Candidates 1 and 5, Mendez is in favor of Candidates 2 and 4, Judy is in favor of Candidates 4 and 3, and Aaron is in favor of Candidates 2 and 3. If the voting is done by straight voting, which two candidates are likely to win?

A director who personally competes with the corporation he or she is employed in is said to have breached the duty of obedience.

The determination of whether a corporate director or officer has met his or her duty of care is measured in hindsight.

The president of a corporation is an example of a corporate officer.

Jameson works for Fishy-Mart Corporation, a chain of superstores that sell large quantities of seafood. His job is to locate future sites for Fishy-Mart stores. Jameson finds a piece of land near a coastline that would make a great site for a Fishy-Mart store. Jameson makes his friend purchase the property from its current owner. After that, they sell the property to Fishy-Mart and share the profits. Jameson does not disclose his interest in the property while recommending the site to Fishy-Mart. Which of the following duties of loyalty has Jameson breached in this scenario?

The duty of loyalty requires directors and officers to subordinate their personal interests to those of the corporation and its shareholders.

A director's failure to properly supervise a subordinate who causes a loss to the corporation would be considered a breach of the duty of care.

The business judgment rule protects shareholders for honest mistakes of judgment.

A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open is known as cumulative voting.