Question 1

Under the Revised Model Business Corporation Act,how long do proxies last if they are not withdrawn?

Accepted Answer

A)   Nine months
B)   Eleven months
C)   One year
D)   Sixteen months
E)   Two years

Question 2

Which of the following are directors who are not officers or employees of the corporation?

Accepted Answer

A)   Approved directors
B)   Outside directors
C)   Inside directors
D)   Affiliated directors
E)   Unaffiliated directors

Question 3

Which of the following are sent to shareholders prior to an annual meeting containing proposals made by shareholders?

Accepted Answer

A)   Meeting agenda
B)   Proxy materials
C)   Presidential materials
D)   Officer materials
E)   Meeting proposals

Question 4

Which of the following is false regarding officers of a corporation?

Accepted Answer

A)   Officers are executive managers.
B)   Officers run the day-to-day business of the corporation.
C)   In most cases an individual may serve as both a director and an officer.
D)   The rules of agency do not apply to the work of officers.
E)   Qualifications required of officers are set forth in the corporate articles and bylaws. D

Question 5

A shareholder may not be held personally liable to a corporation for receiving watered stock.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a term for stock such as that issued to Frances?

Accepted Answer

A)   No-par stock
B)   Reduced stock
C)   Watered stock
D)   Less-value stock
E)   Unapproved stock

Question 7

How are directors typically chosen after the incorporation process?

Accepted Answer

A)   By majority vote of the shareholders.
B)   By majority vote of all officers.
C)   By a two-thirds vote of shareholders.
D)   The president appoints them in his or her discretion.
E)   By a unanimous vote of the shareholders.

Question 8

Decisions of courts in ______ have a significant impact because more than half of U.S.public traded corporations are incorporated there.

Accepted Answer

A)   New York
B)   California
C)   Florida
D)   Delaware
E)   New Jersey

Question 9

A stock subscription agreement signed before incorporation may obligate a person to purchase shares in the corporation.

Accepted Answer

A) True 
 B)False  True

Question 10

For which of the following may a director generally be removed?

Accepted Answer

A)   At the will of the president.
B)   In the discretion of the shareholders upon majority vote.
C)   In the discretion of the shareholders upon a two-thirds vote.
D)   In the discretion of other directors upon a majority vote.
E)   For cause.

Question 11

Which of the following gives preference to shareholders to purchase shares of a new issue of stock?

Accepted Answer

A)   Acknowledged rights
B)   Superior rights
C)   Preemptive rights
D)   Selective rights
E)   Benefit rights

Question 12

If a corporation has fewer than _____ shareholders,the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Accepted Answer

A)   100
B)   50
C)   30
D)   25
E)   10

Question 13

A shareholder can file a direct suit against a director if the director has caused harm to the business by violating a fiduciary duty.

Accepted Answer

A) True 
 B)False

Question 14

If corporate directors fail to sue when the corporation has been harmed by an individual,another corporation,or a director,individual shareholders can file a[n] ______ on behalf of the corporation.

Accepted Answer

A)   Investigative action
B)   Shareholder action suit
C)   Shareholder's direct suit
D)   Shareholder's derivative suit
E)   Active allocation suit

Question 15

When directors or officers violate their duty of loyalty,they are self-dealing.

Accepted Answer

A) True 
 B)False  True

Question 16

What remedy will be imposed on Wendy,if any,for her home kite sales?

Accepted Answer

A)   Nothing because Wendy did not engage in any wrongdoing.
B)   She will be required to cede to the corporation all the profits she earned as a result of the breach.
C)   She will be required to cede to the corporation only profits she earned as a result of the breach that the corporation can prove by a preponderance of the evidence it lost as a result of her actions.
D)   She will be required to cede to the corporation any profits she earned as a result of the breach unless she can by a preponderance of the evidence prove that the corporation lost no sales as a result of her actions.
E)   She will be required to cede to the corporation half of any profits she earned as a result of the breach.

Question 17

Which groups owe a duty of care to the corporation,and what does that duty require?

Accepted Answer

Directors and officers owe a duty of car...

Question 18

Which of the following,if any,is an authorization of a shareholder to allow someone else to vote in his or her place?

Accepted Answer

A)   Approval
B)   Acknowledgement
C)   Proxy
D)   Permissive voucher
E)   There is no such document because a shareholder may not allow someone else to vote in the shareholder's place.

Question 19

While ordinary decisions made by directors require a ______ vote,more important decisions sometimes require a _____ vote.

Accepted Answer

A)   Majority; two-thirds
B)   Majority; three-fourths
C)   Two-thirds; three-fourths
D)   One-third; majority
E)   Majority; unanimous

Question 20

Is Tina accurate that she owes no duties to shareholders?

Accepted Answer

A)   Yes, she is accurate because it is the directors who owe duties to shareholders.
B)   No, she is inaccurate because she owes a duty of care to shareholders although she owes no other duties.
C)   No, she is inaccurate because she owes a duty of loyalty to shareholders although she owes no other duties.
D)   No, she is inaccurate because she owes both a duty of care and a duty of loyalty to shareholders.
E)   She is partially accurate. She owes both a duty of care and a duty of loyalty to minority shareholders, but no duties to majority shareholders because the law assumes that they have the power to protect their own interests.

Exam 39: Corporations: Directors, Officers, and Shareholders

Under the Revised Model Business Corporation Act,how long do proxies last if they are not withdrawn?

Correct AnswerverifiedShow Answer

Which of the following are directors who are not officers or employees of the corporation?

Correct AnswerverifiedShow Answer

Which of the following are sent to shareholders prior to an annual meeting containing proposals made by shareholders?

Correct AnswerverifiedShow Answer

Which of the following is false regarding officers of a corporation?

Correct AnswerverifiedD

A shareholder may not be held personally liable to a corporation for receiving watered stock.

Correct AnswerverifiedShow Answer

Which of the following is a term for stock such as that issued to Frances?

Correct AnswerverifiedShow Answer

How are directors typically chosen after the incorporation process?

Correct AnswerverifiedShow Answer

Decisions of courts in ______ have a significant impact because more than half of U.S.public traded corporations are incorporated there.

Correct AnswerverifiedShow Answer

A stock subscription agreement signed before incorporation may obligate a person to purchase shares in the corporation.

Correct AnswerverifiedTrue

For which of the following may a director generally be removed?

Correct AnswerverifiedShow Answer

Which of the following gives preference to shareholders to purchase shares of a new issue of stock?

Correct AnswerverifiedShow Answer

If a corporation has fewer than _____ shareholders,the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Correct AnswerverifiedShow Answer

A shareholder can file a direct suit against a director if the director has caused harm to the business by violating a fiduciary duty.

Correct AnswerverifiedShow Answer

If corporate directors fail to sue when the corporation has been harmed by an individual,another corporation,or a director,individual shareholders can file a[n] ______ on behalf of the corporation.

Correct AnswerverifiedShow Answer

When directors or officers violate their duty of loyalty,they are self-dealing.

Correct AnswerverifiedTrue

What remedy will be imposed on Wendy,if any,for her home kite sales?

Correct AnswerverifiedShow Answer

Which groups owe a duty of care to the corporation,and what does that duty require?

Correct AnswerverifiedDirectors and officers owe a duty of car...View AnswerShow Answer

Which of the following,if any,is an authorization of a shareholder to allow someone else to vote in his or her place?

Correct AnswerverifiedShow Answer

While ordinary decisions made by directors require a ______ vote,more important decisions sometimes require a _____ vote.

Correct AnswerverifiedShow Answer

Is Tina accurate that she owes no duties to shareholders?

Correct AnswerverifiedShow Answer

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D

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True

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True

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Directors and officers owe a duty of car...
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While ordinary decisions made by directors require a __ vote,more important decisions sometimes require a _ vote.

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