Question 1

In CASE 20.5 Third Point LLC v.Ruprecht (2014),the Delaware Court of Chancery considered whether the __________ had breached its __________ duty when it adopted a(n)__________ stock rights plan in response to an activist hedge-fund's increased holdings in the company's stock.

Accepted Answer

A)  board of directors, fiduciary, two-tiered 
B)  CEO, fiduciary, poison-pill 
C)  board of directors, loyalty, poison-pill 
D)  board of directors, fiduciary, poison-pill

Question 2

The duty of __________ requires officers to exercise reasonable supervision over the business affairs of the corporation.

Accepted Answer

A)  care 
B)  loyalty 
C)  obedience 
D)  ethics

Question 3

In CASE 20.3 In re Citigroup Inc.Shareholder Derivative Litigation(2009),the Delaware Chancery Court__________ the shareholders' claims,holding that the allegations in the __________ were __________ to show that a demand on the __________ would have been futile.

Accepted Answer

A)  affirmed, complaint, sufficient, shareholders 
B)  dismissed, answer, insufficient, directors 
C)  dismissed, complaint, insufficient, directors 
D)  affirmed, answer, sufficient, directors

Question 4

A person must own a majority of shares in a corporation in order to be considered a controlling shareholder.

Accepted Answer

A) True 
 B)False

Question 5

A contractual provision insisted upon by a bidder limiting the ability of board members to negotiate with other bidders is referred to as a(n)__________ clause.

Accepted Answer

A)  obedience 
B)  loyalty 
C)  negotiation 
D)  no-talk

Question 6

The Dodd-Frank Wall Street Reform and Consumer Protection Act outlaws corporate executives from holding stock in companies for which they work.

Accepted Answer

A) True 
 B)False

Question 7

In CASE 20.2 In Re Rural Metro Corporation Shareholders Litigation(2014),the Delaware Chancery court considered whether an investment banker could be held liable as an aider and abettor of a breach of fiduciary duty by the board of directors.

Accepted Answer

A) True 
 B)False

Question 8

In evaluating a buyout proposal,the directors should consider material nonprice provisions of the proposed agreement.

Accepted Answer

A) True 
 B)False

Question 9

The business judgment rule is applicable only if the directors make an informed decision.

Accepted Answer

A) True 
 B)False

Question 10

A(n)__________ gives the person to whom it is granted the right to buy a certain number of shares at a fixed price for a fixed number of years during a period known as the __________ period which is not usually for more than __________.

Accepted Answer

A)  call right; exercise; twelve months 
B)  option; redemption; twelve months 
C)  option; redemption; ten years 
D)  option; exercise; ten years

Question 11

To comply with their duty of loyalty,directors and managers must subordinate their own interests to those of the corporation.

Accepted Answer

A) True 
 B)False

Question 12

In 2013,the SEC proposed an amendment to the Dodd-Frank Act,which requires disclosure of the pay ratio of the median of the annual total compensation of all employees to the annual total compensation of the CEO.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is NOT a prime consideration in determining whether a fiduciary has taken an opportunity that belongs to a corporation?

Accepted Answer

A)  Whether the opportunity is in the corporation's line of business. 
B)  The amount of money the fiduciary stands to make. 
C)  Whether the fiduciary developed the idea using corporation resources. 
D)  Whether the involvement by the fiduciary will hinder the corporation's purposes.

Question 14

Breakup fees are liquidated damages for a terminated proxy fight.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true regarding hostile takeovers in the European Union?

Accepted Answer

A)  All member states must observe the neutrality rule and the breakthrough rule. 
B)  Member states may opt out of the neutrality rule and the breakthrough rule. 
C)  Member states may opt out of the neutrality rule, but all member states must observe the breakthrough rule. 
D)  Member states may opt out of the breakthrough rule, but all member states must observe the neutrality rule.

Question 16

The __________ standard of review comes into place when a(n)__________ implements a defensive measure that touches on issues of shareholder __________.

Accepted Answer

A)  Unocal, board of directors, voting control 
B)  Blaisus, board of directors, voting control 
C)  Revlon,board of directors, approval 
D)  Blasius, CEO, voting control

Question 17

The Smith v.Van Gorkam decision underscores which of the following regarding statements of officers or directors?

Accepted Answer

A)  An outside director, but not an inside director, may in good faith rely upon any statement of an executive officer. 
B)  An inside director, but not an outside director, may in good faith rely upon any statement of an executive officer. 
C)  Any director may in good faith rely upon any statement of an exeecutive officer. 
D)  Not every statement of an executive officer can be relied upon in good faith.

Question 18

The Omnicare,Inc.v.NCS Healthcare,Inc.casediscussed in the text,involved a question of whether directors of an insolvent publicly traded company violated their fiduciary duty when they entered into an agreement for the sale of the company to a particular interested buyer regardless of other offers.The court ruled that:

Accepted Answer

A)  the directors violated their fiduciary duty and lacked the authority to agree to an absolute lock-up guaranteeing the sale and agreeing to forgo consideration of future offers. 
B)  the directors violated their fiduciary duty because the agreement was kept secret from majority shareholders but that, otherwise, the agreement foregoing consideration of future offers would have been valid. 
C)  the directors violated their fiduciary duty because the agreement was kept secret from minority shareholders but that, otherwise, the agreement foregoing consideration of future offers would have been valid. 
D)  the directors satisfied all fiduciary duties because there was no evidence of bad faith or self dealing.

Question 19

What are the seven key factors that directors should consider in deciding whether to sell a company?

Accepted Answer

The answer of What are the seven key factors that...

Question 20

A shareholder derivative suit is a lawsuit by:

Accepted Answer

A)  shareholders on behalf of the corporation. 
B)  the shareholders directly. 
C)  the controlling shareholders on behalf of the majority shareholder. 
D)  the corporation.

Exam 20: Directors, Officers, and Controlling Shareholders.

In CASE 20.5 Third Point LLC v.Ruprecht (2014) ,the Delaware Court of Chancery considered whether the had breached its duty when it adopted a(n) __ stock rights plan in response to an activist hedge-fund's increased holdings in the company's stock.

The duty of __________ requires officers to exercise reasonable supervision over the business affairs of the corporation.

In CASE 20.3 In re Citigroup Inc.Shareholder Derivative Litigation(2009) ,the Delaware Chancery Court the shareholders' claims,holding that the allegations in the were to show that a demand on the would have been futile.

A person must own a majority of shares in a corporation in order to be considered a controlling shareholder.

A contractual provision insisted upon by a bidder limiting the ability of board members to negotiate with other bidders is referred to as a(n) __________ clause.

The Dodd-Frank Wall Street Reform and Consumer Protection Act outlaws corporate executives from holding stock in companies for which they work.

In CASE 20.2 In Re Rural Metro Corporation Shareholders Litigation(2014),the Delaware Chancery court considered whether an investment banker could be held liable as an aider and abettor of a breach of fiduciary duty by the board of directors.

In evaluating a buyout proposal,the directors should consider material nonprice provisions of the proposed agreement.

The business judgment rule is applicable only if the directors make an informed decision.

A(n) gives the person to whom it is granted the right to buy a certain number of shares at a fixed price for a fixed number of years during a period known as the period which is not usually for more than __.

To comply with their duty of loyalty,directors and managers must subordinate their own interests to those of the corporation.

In 2013,the SEC proposed an amendment to the Dodd-Frank Act,which requires disclosure of the pay ratio of the median of the annual total compensation of all employees to the annual total compensation of the CEO.

Which of the following is NOT a prime consideration in determining whether a fiduciary has taken an opportunity that belongs to a corporation?

Breakup fees are liquidated damages for a terminated proxy fight.

Which of the following is true regarding hostile takeovers in the European Union?

The standard of review comes into place when a(n) implements a defensive measure that touches on issues of shareholder __.

The Smith v.Van Gorkam decision underscores which of the following regarding statements of officers or directors?

What are the seven key factors that directors should consider in deciding whether to sell a company?

A shareholder derivative suit is a lawsuit by:

Exam 20: Directors, Officers, and Controlling Shareholders.

In CASE 20.5 Third Point LLC v.Ruprecht (2014) ,the Delaware Court of Chancery considered whether the __________ had breached its __________ duty when it adopted a(n) __________ stock rights plan in response to an activist hedge-fund's increased holdings in the company's stock.

The duty of __________ requires officers to exercise reasonable supervision over the business affairs of the corporation.

In CASE 20.3 In re Citigroup Inc.Shareholder Derivative Litigation(2009) ,the Delaware Chancery Court__________ the shareholders' claims,holding that the allegations in the __________ were __________ to show that a demand on the __________ would have been futile.

A person must own a majority of shares in a corporation in order to be considered a controlling shareholder.

A contractual provision insisted upon by a bidder limiting the ability of board members to negotiate with other bidders is referred to as a(n) __________ clause.

The Dodd-Frank Wall Street Reform and Consumer Protection Act outlaws corporate executives from holding stock in companies for which they work.

In CASE 20.2 In Re Rural Metro Corporation Shareholders Litigation(2014),the Delaware Chancery court considered whether an investment banker could be held liable as an aider and abettor of a breach of fiduciary duty by the board of directors.

In evaluating a buyout proposal,the directors should consider material nonprice provisions of the proposed agreement.

The business judgment rule is applicable only if the directors make an informed decision.

A(n) __________ gives the person to whom it is granted the right to buy a certain number of shares at a fixed price for a fixed number of years during a period known as the __________ period which is not usually for more than __________.

To comply with their duty of loyalty,directors and managers must subordinate their own interests to those of the corporation.

In 2013,the SEC proposed an amendment to the Dodd-Frank Act,which requires disclosure of the pay ratio of the median of the annual total compensation of all employees to the annual total compensation of the CEO.

Which of the following is NOT a prime consideration in determining whether a fiduciary has taken an opportunity that belongs to a corporation?

Breakup fees are liquidated damages for a terminated proxy fight.

Which of the following is true regarding hostile takeovers in the European Union?

The __________ standard of review comes into place when a(n) __________ implements a defensive measure that touches on issues of shareholder __________.

The Smith v.Van Gorkam decision underscores which of the following regarding statements of officers or directors?

What are the seven key factors that directors should consider in deciding whether to sell a company?

A shareholder derivative suit is a lawsuit by:

In CASE 20.5 Third Point LLC v.Ruprecht (2014) ,the Delaware Court of Chancery considered whether the had breached its duty when it adopted a(n) __ stock rights plan in response to an activist hedge-fund's increased holdings in the company's stock.

In CASE 20.3 In re Citigroup Inc.Shareholder Derivative Litigation(2009) ,the Delaware Chancery Court the shareholders' claims,holding that the allegations in the were to show that a demand on the would have been futile.

A(n) gives the person to whom it is granted the right to buy a certain number of shares at a fixed price for a fixed number of years during a period known as the period which is not usually for more than __.

The standard of review comes into place when a(n) implements a defensive measure that touches on issues of shareholder __.