Question 1

Which of the following best describes the appraisal remedy?

Accepted Answer

A) the right of the court to grant relief to shareholders who are victims of oppressively unfair actions 
B) the right of an auditor to have access to all the corporation's information 
C) the right of a minority shareholder to apply to the court for a liquidation order 
D) the right of a dissenting shareholder to have his or her shares bought out by the corporation 
E) the right of shareholders to appoint an auditor 
A) the right of the court to grant relief to shareholders who are victims of oppressively unfair actions 
B) the right of an auditor to have access to all the corporation's information 
C) the right of a minority shareholder to apply to the court for a liquidation order 
D) the right of a dissenting shareholder to have his or her shares bought out by the corporation 
E) the right of shareholders to appoint an auditor D

Question 2

Which is more preferable: a simple shareholder agreement or a unanimous shareholder agreement? Why?

Accepted Answer

A simple shareholders agreement need not be between all of the common shareholders,and even if it is,it must be restricted to the roles of the parties as shareholders.A unanimous shareholder agreement must be between all the common shareholders and need not be restricted to the role of the parties as shareholders.Further provisions in such an agreement usually supersede the provisions of provincial and federal legislation,permitting the powers of the directors to be restricted in whole or part.Thus,a unanimous shareholder agreement would be more preferable to have.

Question 3

Canadian courts have consistently held that a majority shareholder owes ________ to act for the welfare of the corporation.

Accepted Answer

A) fiduciary duties 
B) no positive duty 
C) a duty of loyalty 
D) a non-compete duty 
E) a positive duty 
A) fiduciary duties 
B) no positive duty 
C) a duty of loyalty 
D) a non-compete duty 
E) a positive duty B

Question 4

Joseph is director of Marttel Inc.The company is thinking about buying some land in which Joseph is part owner.At the board of directors meeting where this is discussed and voted on,Joseph should

Accepted Answer

A) reveal,discuss,and vote on the matter since this is his fiduciary duty. 
B) explain fully of his interests in the land,then vote his conscience. 
C) abstain from voting on the matter since this is a potential conflict of interests. 
D) be silent and refrain from voting on this matter. 
E) graciously be absent from the meeting. 
A) reveal,discuss,and vote on the matter since this is his fiduciary duty. 
B) explain fully of his interests in the land,then vote his conscience. 
C) abstain from voting on the matter since this is a potential conflict of interests. 
D) be silent and refrain from voting on this matter. 
E) graciously be absent from the meeting.

Question 5

The winding up (dissolution)of a corporation can be required by a court in order to rescue a

Accepted Answer

A) bankrupt shareholder. 
B) CEO who has reached an impasse with the board of directors. 
C) director who has been unjustly dismissed. 
D) locked-in shareholder. 
E) minority shareholder from a buyout by others. 
A) bankrupt shareholder. 
B) CEO who has reached an impasse with the board of directors. 
C) director who has been unjustly dismissed. 
D) locked-in shareholder. 
E) minority shareholder from a buyout by others.

Question 6

Sometimes almost all the directors of a company have interests in a contract.They should

Accepted Answer

A) present the contract to the management for a decision. 
B) vote as a total board of directors. 
C) present the contract to a general meeting of shareholders for their ratification after full disclosure has been made. 
D) gather the remaining independent directors and form a quorum. 
E) vote as a corporate committee of the whole. 
A) present the contract to the management for a decision. 
B) vote as a total board of directors. 
C) present the contract to a general meeting of shareholders for their ratification after full disclosure has been made. 
D) gather the remaining independent directors and form a quorum. 
E) vote as a corporate committee of the whole.

Question 7

As you have seen in previous chapters,these days it is common in sophisticated contracts to have provisions requiring mandatory mediation or binding arbitration to resolve disputes arising between the parties.As between the majority and minority shareholders of a corporation,who do you think would favour one form of dispute resolution over the other?

Accepted Answer

Mandatory mediation serves to help the p

Question 8

A director will be criminally liable where she or he

Accepted Answer

A) uses corporate information to make personal profit. 
B) acts as corporate agent to the determent of the corporation. 
C) gets involved with insider trading. 
D) intercepts a corporate opportunity. 
E) directly competes with the corporation in her or his own business. 
A) uses corporate information to make personal profit. 
B) acts as corporate agent to the determent of the corporation. 
C) gets involved with insider trading. 
D) intercepts a corporate opportunity. 
E) directly competes with the corporation in her or his own business.

Question 9

A shareholder who is being pushed out of a company by the other shareholders because they hold a majority of common shares can always use the remedy of a derivative action.

Accepted Answer

A) True 
 B)False

Question 10

Have the numerous changes to corporate legislation,which impose more and more duties on directors of corporations,changed the concept of limited liability for shareholders of small privately held companies who are often also the directors and officers,so as to act as a possible deterrent to incorporation as the best method of limiting liability?

Accepted Answer

This is not an easy question to answer.T

Question 11

A proceeding brought by one or more shareholders in the name of the corporation in respect of a wrong done to the corporation is referred to as

Accepted Answer

A) an oppression action. 
B) a winding-up action. 
C) a derivative action. 
D) an appraisal action. 
E) a negligence action. 
A) an oppression action. 
B) a winding-up action. 
C) a derivative action. 
D) an appraisal action. 
E) a negligence action.

Question 12

What is the difference between the business of a corporation and the affairs of a corporation?

Accepted Answer

Under the Canadian Business Corporations

Question 13

The CEO of a corporation is

Accepted Answer

A) chosen from the board of directors. 
B) appointed or hired by the board of directors. 
C) hired by the president. 
D) in charge of the board meetings. 
E) elected by the shareholders. 
A) chosen from the board of directors. 
B) appointed or hired by the board of directors. 
C) hired by the president. 
D) in charge of the board meetings. 
E) elected by the shareholders.

Question 14

Charles,a minority shareholder in a large private provincial company,has just learned that the controlling shareholder together with the directors of the company intend to sell a large portion of the property owned by the corporation at a price less than its fair market value.If Charles wants to stop this,he will

Accepted Answer

A) seek the oppression remedy. 
B) launch a derivative action. 
C) bring an appraisal remedy. 
D) seek an order to wind up the company. 
E) all of the above 
A) seek the oppression remedy. 
B) launch a derivative action. 
C) bring an appraisal remedy. 
D) seek an order to wind up the company. 
E) all of the above

Question 15

Directors owe duties to

Accepted Answer

A) the public. 
B) creditors of the corporation. 
C) the shareholders. 
D) the corporation. 
E) all of the above 
A) the public. 
B) creditors of the corporation. 
C) the shareholders. 
D) the corporation. 
E) all of the above

Question 16

A director who fails to act in the best interests of a company is liable in damages to the shareholders.

Accepted Answer

A) True 
 B)False

Question 17

In a small private provincial company where the shareholders are also the directors and officers,does corporate governance really matter?

Accepted Answer

In such companies little thought is give

Question 18

Directors are responsible for the day-to-day operation of a company's business.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is NOT a duty of the directors of corporations?

Accepted Answer

A) to adopt by-laws governing the business 
B) to issue shares 
C) to call meetings of shareholders 
D) to take care of the day-to-day business of the corporation 
E) to declare dividends 
A) to adopt by-laws governing the business 
B) to issue shares 
C) to call meetings of shareholders 
D) to take care of the day-to-day business of the corporation 
E) to declare dividends

Question 20

John,the controlling shareholder of a large national company,elected Allan,Edward,and Mary as its directors.John has just heard of a venture that may or may not be beneficial to the company,but using his power as controlling shareholder,wants to go ahead with it and tells the three directors to approve it,which they do.It then turns out that the venture does more harm than good to the company.In this case

Accepted Answer

A) John owes no fiduciary duty to the corporation. 
B) John owes no duty to account to the corporation. 
C) John owes no duty to the corporation. 
D) John owes no duty of care to the corporation. 
E) all of the above 
A) John owes no fiduciary duty to the corporation. 
B) John owes no duty to account to the corporation. 
C) John owes no duty to the corporation. 
D) John owes no duty of care to the corporation. 
E) all of the above

Exam 26: Corporate Governance: the Internal Affairs of Corporations

Which of the following best describes the appraisal remedy?

Which is more preferable: a simple shareholder agreement or a unanimous shareholder agreement? Why?

Canadian courts have consistently held that a majority shareholder owes ________ to act for the welfare of the corporation.

Joseph is director of Marttel Inc.The company is thinking about buying some land in which Joseph is part owner.At the board of directors meeting where this is discussed and voted on,Joseph should

The winding up (dissolution)of a corporation can be required by a court in order to rescue a

Sometimes almost all the directors of a company have interests in a contract.They should

A director will be criminally liable where she or he

A shareholder who is being pushed out of a company by the other shareholders because they hold a majority of common shares can always use the remedy of a derivative action.

A proceeding brought by one or more shareholders in the name of the corporation in respect of a wrong done to the corporation is referred to as

What is the difference between the business of a corporation and the affairs of a corporation?

The CEO of a corporation is

Directors owe duties to

A director who fails to act in the best interests of a company is liable in damages to the shareholders.

In a small private provincial company where the shareholders are also the directors and officers,does corporate governance really matter?

Directors are responsible for the day-to-day operation of a company's business.

Which of the following is NOT a duty of the directors of corporations?

Law, society, and Business

The Machinery of Justice

Government Regulation of Business

The Law of Torts

Professional Liability: the Legal Challenges

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration and Intention

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Set Aside: Mistake and Misrepresentation

Writing and Interpretation

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

Breach of Contract and Its Remedies

Sale of Goods and Consumer Contracts

Bailment and Leasing

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

Corporate Governance: External Responsibilities

Secured Transactions

Creditors Rights

International Business Transactions

Electronic Commerce

Privacy

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