Question 1

Directors are elected at the annual meeting of shareholders.

Accepted Answer

A) True 
 B)False  True

Question 2

If the board delegates to a committee its duty to select a new company president:

Accepted Answer

A)  the members of that committee may be responsible individuals other than board members. 
B)  the committee must consist of board members and may be authorized unless otherwise provided by the articles of incorporation or bylaws. 
C)  the non-committee directors are relieved of liability for acts of the committee. 
D)  the committee may exercise all the authority of the board. 
A)  the members of that committee may be responsible individuals other than board members. 
B)  the committee must consist of board members and may be authorized unless otherwise provided by the articles of incorporation or bylaws. 
C)  the non-committee directors are relieved of liability for acts of the committee. 
D)  the committee may exercise all the authority of the board. B

Question 3

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Accepted Answer

A)  notifies the preparer of the information. 
B)  reasonably believes that the information is reliable. 
C)  conducts his own independent investigation. 
D)  is given a sworn affidavit by the preparer. 
A)  notifies the preparer of the information. 
B)  reasonably believes that the information is reliable. 
C)  conducts his own independent investigation. 
D)  is given a sworn affidavit by the preparer. B

Question 4

Voting trusts generally are effective for one year.

Accepted Answer

A) True 
 B)False

Question 5

A proxy is effective until the shareholder revokes it.

Accepted Answer

A) True 
 B)False

Question 6

A shareholder may bring a direct suit to enforce a claim that she has against the corporation, based on her ownership of shares.

Accepted Answer

A) True 
 B)False

Question 7

The articles of incorporation, incorporation statute, and bylaws set the number of directors.

Accepted Answer

A) True 
 B)False

Question 8

In most states, a corporation may, with shareholder approval, limit or eliminate the liability of directors for some breaches of the duties which they owe to the corporation.

Accepted Answer

A) True 
 B)False

Question 9

The Dodd-Frank Act requires that publicly held companies include a provision in yearly proxy statements for a binding shareholder vote on executive compensation.

Accepted Answer

A) True 
 B)False

Question 10

Directors may vote by proxy when they are not able to be present for a meeting.

Accepted Answer

A) True 
 B)False

Question 11

The percentage of shares required for a quorum may vary from state to state and from company to company.

Accepted Answer

A) True 
 B)False

Question 12

The RMBCA states that "all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its:

Accepted Answer

A)  board of directors." 
B)  chief executive officer." 
C)  officers." 
D)  shareholders." 
A)  board of directors." 
B)  chief executive officer." 
C)  officers." 
D)  shareholders."

Question 13

In Donahue v. Rodd Electrotype Co., Inc. , the court's opinion stated:

Accepted Answer

A)  by definition, a close corporation strongly resembles a partnership. 
B)  minority shareholders have no right to rely on the loyalty and abilities of the majority. 
C)  minority shareholders in a close corporation can cause dissolution of the corporation. 
D)  when a close corporation purchases the shares of a controlling stockholder, there is necessarily a preferential distribution of the corporation's assets. 
A)  by definition, a close corporation strongly resembles a partnership. 
B)  minority shareholders have no right to rely on the loyalty and abilities of the majority. 
C)  minority shareholders in a close corporation can cause dissolution of the corporation. 
D)  when a close corporation purchases the shares of a controlling stockholder, there is necessarily a preferential distribution of the corporation's assets.

Question 14

A quorum of shares must be present at the shareholders' meeting, either in person or by proxy, to make effective decisions.

Accepted Answer

A) True 
 B)False

Question 15

If Eilene, a shareholder, sues in a derivative suit, the judgment will be paid to:

Accepted Answer

A)  the shareholders as a dividend. 
B)  Eilene directly. 
C)  the corporate treasury. 
D)  the board of directors. 
A)  the shareholders as a dividend. 
B)  Eilene directly. 
C)  the corporate treasury. 
D)  the board of directors.

Question 16

A shareholder has no right to dissent from compulsory share exchanges.

Accepted Answer

A) True 
 B)False

Question 17

The remedy for a director's breach of fiduciary duty is:

Accepted Answer

A)  a suit in equity by the corporation. 
B)  a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach. 
C)  a class action suit by the shareholders. 
D)  Not only  a suit in equity by the corporation but also  a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach. 
A)  a suit in equity by the corporation. 
B)  a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach. 
C)  a class action suit by the shareholders. 
D)  Not only  a suit in equity by the corporation but also  a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach.

Question 18

In 2005, the Revised Act was amended to emphasize the responsibility of officers to inform others in the corporation of matters that come to their attention, including any material violation of law involving the corporation or material breach of duty by an officer, employee, or agent of the corporation.

Accepted Answer

A) True 
 B)False

Question 19

A shareholder would have all of the following rights EXCEPT the right to:

Accepted Answer

A)  inspect the corporate records in order to discover customer lists to share with a competitor. 
B)  see corporate financial statements in order to value his share for future sale. 
C)  bring suit against the corporation to require payment of his declared dividend. 
D)  bring suit on behalf of the corporation to recover improper dividends. 
A)  inspect the corporate records in order to discover customer lists to share with a competitor. 
B)  see corporate financial statements in order to value his share for future sale. 
C)  bring suit against the corporation to require payment of his declared dividend. 
D)  bring suit on behalf of the corporation to recover improper dividends.

Question 20

Assuming no special provision in the articles of incorporation, special shareholder meetings may be called by:

Accepted Answer

A)  the president of the company. 
B)  any individual director. 
C)  any individual shareholder. 
D)  holders of at least 10% of shares. 
A)  the president of the company. 
B)  any individual director. 
C)  any individual shareholder. 
D)  holders of at least 10% of shares.

Exam 35: Management Structure of Corporations

Directors are elected at the annual meeting of shareholders.

If the board delegates to a committee its duty to select a new company president:

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Voting trusts generally are effective for one year.

A proxy is effective until the shareholder revokes it.

A shareholder may bring a direct suit to enforce a claim that she has against the corporation, based on her ownership of shares.

The articles of incorporation, incorporation statute, and bylaws set the number of directors.

In most states, a corporation may, with shareholder approval, limit or eliminate the liability of directors for some breaches of the duties which they owe to the corporation.

The Dodd-Frank Act requires that publicly held companies include a provision in yearly proxy statements for a binding shareholder vote on executive compensation.

Directors may vote by proxy when they are not able to be present for a meeting.

The percentage of shares required for a quorum may vary from state to state and from company to company.

The RMBCA states that "all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its:

In Donahue v. Rodd Electrotype Co., Inc. , the court's opinion stated:

A quorum of shares must be present at the shareholders' meeting, either in person or by proxy, to make effective decisions.

If Eilene, a shareholder, sues in a derivative suit, the judgment will be paid to:

A shareholder has no right to dissent from compulsory share exchanges.

The remedy for a director's breach of fiduciary duty is:

A shareholder would have all of the following rights EXCEPT the right to:

Assuming no special provision in the articles of incorporation, special shareholder meetings may be called by:

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance Breach and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property Property Insurance Bailments and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

Filters