Exam 29: Management of the Corporate Business

Distanet Corporation and Telenex Corporation are competitors in the gaming accessories market. Telenex has been the market leader for over five years. After examining the price and sales data of products from both companies and consulting an economist and an accountant, Distanet's directors vote for a reduction in price of Distanet's products. They believe that reducing prices would make the company more competitive. The decision to reduce prices does not improve sales significantly. In fact, Distanet's revenues decrease as a result of the decision. Aileen, a stockholder of Distanet, seeks to hold Distanet's directors liable for the failure of the plan to improve Distanet's position in the computer market and for the losses experienced by the corporation as a result of the implementation of the plan. Will she succeed in her suit?

A law that holds that directors will have no liability for breach of the duty of care in the absence of willful misconduct or recklessness and that does not require board or shareholder action is called a(n):

According to the MBCA, all corporate powers shall be exercised by or under the authority of, and the business and affairs of a corporation shall be managed under the direction of a _____.

Officers and directors are not liable to the corporation if they act with the common sense, practical wisdom, and informed judgement that could be expected of an ordinarily prudent person.

The cap on monetary damages statute holds that the maximum liability that may be imposed on directors is the greater of:

In cases where an officer or director has been found guilty of a crime, he or she may be indemnified under voluntary indemnification if:

A charter option statute authorizes a corporation to adopt a specific amendment to its articles of incorporation to:

Discuss whether a corporation may indemnify a director, officer or employee for the cost of defending and/or settling a lawsuit or criminal charge brought against the director, officer or employee.

A _____ places a ceiling on director liability for breach of duty; the board and the shareholders, however, may amend the corporate charter to reduce the cap.

Where corporate activities cause injury or economic damage to others, the officer in charge, but not the directors, may be held liable.