Exam 27: Managing the Corporate Entity

Officers have the authority of general agents for the operation of the normal business of the corporation.

Once a corporation's board of directors declares a dividend,it becomes a corporate debt and is enforceable by law.

Alan,a corporate manager at DollarShopper Corp. ,decides he would like to pursue a business opportunity he knows DollarShopper would also be interested in.Under the corporate opportunity rule,Alan may:

________ elect the ________,who take whatever actions are appropriate and in the best interests of the corporation.

To submit a shareholder proposal,a shareholder must have owned (for the past year)________ percent or ________ in market value of the voting stock of the corporation.

In the case United States v.Todd Newman and Anthony Chiasson,the Second Circuit Court of Appeals held that for a ________ to be ________,she must have the requisite ________ to receive a personal benefit in exchange for that information.

If Hannah owns 10% of the stock of Modern Co. ,a private company,she has the right under Sarbanes-Oxley to purchase a proportionate share of Modern Co when it goes public.

Shareholders of Mitas Corp.are concerned that the directors are not performing their tasks properly for the benefit of the corporation.Discuss what must be done by the shareholders before bringing a derivative suit.

If Benjamin,who is a corporate manager at OfficeMojo.com,is offered two season tickets and offers them to his colleague Jasper who is the CEO,Benjamin has a safe harbor under the "corporate opportunity" doctrine.

To encourage individuals to serve on boards of directors,legislatures have enacted a variety of measures to protect the good faith and due diligent activities of directors.Discuss the types of measures enacted by state legislation.

The Opening Case,Unocal v.Mesa Petroleum,involved a question as to whether the Unocal's board was protected by the business judgment rule.

Dave,a manager for Small Co. ,has authority to contract for credit sales of up to $100,000.Dave decides to extend $300,000 of credit for Christmas merchandise to a new customer with solid financial statements.Discuss if Small Co.is bound by this transaction and how Small Co.might choose to be bound if not already bound.

Under the business judgment rule,the shareholders will not interfere with most business decisions.

The quorum-or minimum number of directors necessary to conduct business-is usually one more than half (51%)of the total number of directors and does not apply to special meetings.

Koto,a successful accountant,has been invited to join the board of directors of Big Corp.Koto is concerned that she will face personal liability for her decisions while on the board of Big.Big Corp.can limit Koto's liability at this point in time by including:

Tye,a director at Big Co. ,suspects wrongdoing within Big Co.and after investigation,uncovers legal violations.Discuss the steps that must be taken under current law in light of this discovery.

The shareholders establish broad policies,and the officers and other employees implement those policies.The directors are the owners of the corporation.

A shareholder's preemptive right gives her the right to purchase up to a ten percent (10%)share of every new offering of stock by the corporation.

The "Unocal Rule" says that under the business judgment rule,board members have the right and the duty to work to block a takeover bid when that bid will damage the corporation and legitimate corporate plans.

Inside information is material,nonpublic,speculative data that can be used to buy or sell securities at a profit.