Question 1

While officers, as agents of a corporation, owe an agent's duty of obedience, diligence, and loyalty to the corporation, this is not true of directors.

Accepted Answer

A) True 
 B)False  False

Question 2

Assume that 12,000 shares are represented at a shareholder meeting.How many votes are normally necessary to carry a motion?

Accepted Answer

A)  10,000 
B)  6,001 
C)  4,001 
D)  8,001 
A)  10,000 
B)  6,001 
C)  4,001 
D)  8,001 B

Question 3

If Marge, a vice president, made a contract on behalf of Barker Corporation when it was not within her authority, she is liable if she negligently exceeded her authority.

Accepted Answer

A) True 
 B)False  True

Question 4

The directors of a corporation are expected to devote their full time to the corporation's affairs.

Accepted Answer

A) True 
 B)False

Question 5

The right of a shareholder to examine the books and records of the corporation may be denied if the shareholder:

Accepted Answer

A)  seeks information to determine the financial condition of the corporation. 
B)  seeks information to embarrass or cause loss to the corporation. 
C)  desires the names and addresses of other shareholders. 
D)  desires to know the value of shares. 
A)  seeks information to determine the financial condition of the corporation. 
B)  seeks information to embarrass or cause loss to the corporation. 
C)  desires the names and addresses of other shareholders. 
D)  desires to know the value of shares.

Question 6

The Dodd-Frank Wall Street Reform and Consumer Protection Act:

Accepted Answer

A)  authorizes the SEC to issue rules requiring that a publicly held company's proxy solicitation include nominations for the board of directors that have been submitted by shareholders. 
B)  authorizes the SEC to issue rules directing the national securities exchanges to require that no member of a listed company's compensation committee be an independent director. 
C)  was signed into law in 2009. 
D)  All of these are correct. 
A)  authorizes the SEC to issue rules requiring that a publicly held company's proxy solicitation include nominations for the board of directors that have been submitted by shareholders. 
B)  authorizes the SEC to issue rules directing the national securities exchanges to require that no member of a listed company's compensation committee be an independent director. 
C)  was signed into law in 2009. 
D)  All of these are correct.

Question 7

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

Accepted Answer

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

Question 8

a.Ron wants to buy all of the stock of Quagmar, Inc.He approaches the officers and directors and offers to pay them $200 per share for each of the shares they hold.The officers and directors agree and then convince the majority of shareholders to sell their stock for $100 per share.Do the other stockholders have a cause of action against the officers and directors? Explain.
b.Arthur, Bob, and Clark are three of the five board members of Krescent, Inc.One day they meet by chance for breakfast and decide to transact some corporate business while they are all together.If they decide to declare a dividend and to purchase another building for the corporation at this meeting, will their actions be binding on the corporation? Explain.

Accepted Answer

a.Yes.The officers and directors have a

Question 9

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

Accepted Answer

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

Question 10

The members of the board of directors are trustees of the corporation.

Accepted Answer

A) True 
 B)False

Question 11

What are some of the matters involving fundamental changes in the corporation and requiring shareholder approval?

Accepted Answer

A)  Amendments to articles of incorporation. 
B)  Selection of a corporate president. 
C)  Sale or lease of corporate assets in the regular course of business. 
D)  Removal of the corporation's officers. 
E)  All of these. 
A)  Amendments to articles of incorporation. 
B)  Selection of a corporate president. 
C)  Sale or lease of corporate assets in the regular course of business. 
D)  Removal of the corporation's officers. 
E)  All of these.

Question 12

Any limits on the duration of the shareholder agreement must be set forth in the agreement.

Accepted Answer

A) True 
 B)False

Question 13

Notice of a shareholder's meeting may not be waived.

Accepted Answer

A) True 
 B)False

Question 14

In which of the following areas does the board determine corporate policy?

Accepted Answer

A)  Setting management compensation. 
B)  Determining the corporation's capital structure. 
C)  Selecting and removing officers. 
D)  Initiating fundamental changes and declaring dividends. 
E)  All of these are determined by the board. 
A)  Setting management compensation. 
B)  Determining the corporation's capital structure. 
C)  Selecting and removing officers. 
D)  Initiating fundamental changes and declaring dividends. 
E)  All of these are determined by the board.

Question 15

In the absence of a specific agreement, shares of stock are not freely transferable.

Accepted Answer

A) True 
 B)False

Question 16

With respect to the voting rights of shareholders, unless the articles of incorporation provide otherwise, a shareholder is entitled to:

Accepted Answer

A)  one vote for every two shares of stock owned. 
B)  vote only at annual shareholder meetings. 
C)  vote at annual and special shareholder meetings with one vote for each share of stock he owns. 
D)  vote only in person and not by proxy. 
A)  one vote for every two shares of stock owned. 
B)  vote only at annual shareholder meetings. 
C)  vote at annual and special shareholder meetings with one vote for each share of stock he owns. 
D)  vote only in person and not by proxy.

Question 17

Tunso Corp.has 1,000 shares of stock outstanding that are permitted to vote for directors.If Tunso Corp.permits cumulative voting, a minority shareholder would need to vote how many shares to elect one of three directors?

Accepted Answer

A)  501 
B)  201 
C)  251 
D)  334 
A)  501 
B)  201 
C)  251 
D)  334

Question 18

All of the following would constitute a "fundamental change" to the corporation EXCEPT:

Accepted Answer

A)  a stock dividend. 
B)  a merger. 
C)  an amendment to the articles of incorporation. 
D)  selling off 60% of the business assets not in the regular course of business. 
A)  a stock dividend. 
B)  a merger. 
C)  an amendment to the articles of incorporation. 
D)  selling off 60% of the business assets not in the regular course of business.

Question 19

Only the board of directors may approve fundamental changes in the corporation.

Accepted Answer

A) True 
 B)False

Question 20

The 1969 amendments to the MBCA, which were carried over to the Revised Act, tightened restrictions on closely held corporations.

Accepted Answer

A) True 
 B)False

Exam 35: Management Structure of Corporations

While officers, as agents of a corporation, owe an agent's duty of obedience, diligence, and loyalty to the corporation, this is not true of directors.

Assume that 12,000 shares are represented at a shareholder meeting.How many votes are normally necessary to carry a motion?

If Marge, a vice president, made a contract on behalf of Barker Corporation when it was not within her authority, she is liable if she negligently exceeded her authority.

The directors of a corporation are expected to devote their full time to the corporation's affairs.

The right of a shareholder to examine the books and records of the corporation may be denied if the shareholder:

The Dodd-Frank Wall Street Reform and Consumer Protection Act:

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

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

The members of the board of directors are trustees of the corporation.

What are some of the matters involving fundamental changes in the corporation and requiring shareholder approval?

Any limits on the duration of the shareholder agreement must be set forth in the agreement.

Notice of a shareholder's meeting may not be waived.

In which of the following areas does the board determine corporate policy?

In the absence of a specific agreement, shares of stock are not freely transferable.

With respect to the voting rights of shareholders, unless the articles of incorporation provide otherwise, a shareholder is entitled to:

Tunso Corp.has 1,000 shares of stock outstanding that are permitted to vote for directors.If Tunso Corp.permits cumulative voting, a minority shareholder would need to vote how many shares to elect one of three directors?

All of the following would constitute a "fundamental change" to the corporation EXCEPT:

Only the board of directors may approve fundamental changes in the corporation.

The 1969 amendments to the MBCA, which were carried over to the Revised Act, tightened restrictions on closely held corporations.

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

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 Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

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 Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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