Question 1

In most states, but not under the Revised Act, cumulative voting is permissive and not mandatory.

Accepted Answer

A) True 
 B)False

Question 2

A voting trust permits a concentration of corporate control in one or more persons.

Accepted Answer

A) True 
 B)False

Question 3

Some publicly held corporations have used supermajority shareholder voting requirements to defend against hostile takeover bids.

Accepted Answer

A) True 
 B)False

Question 4

Under the Statutory Close Corporation Supplement, a closely held corporation may use a shareholder agreement in place of bylaws.

Accepted Answer

A) True 
 B)False

Question 5

Randall has been a member of the board of his sister's company for three years but has never actually attended a board meeting.He may be liable for failing to act.

Accepted Answer

A) True 
 B)False

Question 6

Unlike voting trusts, shareholder voting agreements are not limited in duration.

Accepted Answer

A) True 
 B)False

Question 7

To protect a shareholder's interest in the corporation, the law provides shareholders with certain enforcement rights.

Accepted Answer

A) True 
 B)False

Question 8

The officers and the directors are fiduciaries of the corporation, but the business judgment rule may preclude liability on officers and directors for honest mistakes of judgment.

Accepted Answer

A) True 
 B)False

Question 9

The 2002 Sarbanes-Oxley Act forbids use of an audit committee by the board of a publicly held corporation; the full board must oversee the work of the public accounting firm employed to audit the corporate books.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

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

Question 11

A proxy is effective until the shareholder revokes it.

Accepted Answer

A) True 
 B)False

Question 12

The Revised Act provides that every shareholder is entitled to examine specified corporate records upon prior signed written request if the demand is made in good faith, for a proper purpose, and during regular business hours at the corporation's principal office.

Accepted Answer

A) True 
 B)False

Question 13

The role of shareholders in managing the corporation is generally restricted to:

Accepted Answer

A)  the approval of corporate transactions that are void or voidable unless ratified. 
B)  election of directors. 
C)  approval of certain extraordinary measures. 
D)  All of these are restrictions. 
E)  None of these are restrictions. 
A)  the approval of corporate transactions that are void or voidable unless ratified. 
B)  election of directors. 
C)  approval of certain extraordinary measures. 
D)  All of these are restrictions. 
E)  None of these are restrictions.

Question 14

MegaValue Corporation requires a quorum of five directors.If Branson, a director, shows up at the meeting for a vote on his favorite topic (dividends) and withdraws thereafter, leaving only four directors, they, under the Revised Act, may not act on any further business.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The board of directors of a corporation:

Accepted Answer

A)  determines the capital structure and financial policy of the corporation. 
B)  has the power to bind the corporation when acting as a unit or individually. 
C)  receives no salaries for services, although directors may receive a fee for attending board meetings. 
D)  All of these are correct. 
A)  determines the capital structure and financial policy of the corporation. 
B)  has the power to bind the corporation when acting as a unit or individually. 
C)  receives no salaries for services, although directors may receive a fee for attending board meetings. 
D)  All of these are correct.

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The Investor Protection and Securities Reform Act of 2010 imposes new corporate governance rules on both publicly held and privately held companies.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Arthur is a shareholder of Rowson, Inc.He has evidence to suggest that its president/CEO has allowed the corporation to engage in acts that are ultra vires .Based upon this evidence, Arthur contacts an attorney and sues the corporation on behalf of the corporation.The lawsuit Arthur has filed is known as:

Accepted Answer

A)  an unauthorized suit. 
B)  a direct suit. 
C)  a derivative suit. 
D)  a class action suit. 
A)  an unauthorized suit. 
B)  a direct suit. 
C)  a derivative suit. 
D)  a class action suit.

Exam 35: Management Structure of Corporations

In most states, but not under the Revised Act, cumulative voting is permissive and not mandatory.

A voting trust permits a concentration of corporate control in one or more persons.

Some publicly held corporations have used supermajority shareholder voting requirements to defend against hostile takeover bids.

Under the Statutory Close Corporation Supplement, a closely held corporation may use a shareholder agreement in place of bylaws.

Randall has been a member of the board of his sister's company for three years but has never actually attended a board meeting.He may be liable for failing to act.

Unlike voting trusts, shareholder voting agreements are not limited in duration.

To protect a shareholder's interest in the corporation, the law provides shareholders with certain enforcement rights.

The officers and the directors are fiduciaries of the corporation, but the business judgment rule may preclude liability on officers and directors for honest mistakes of judgment.

The 2002 Sarbanes-Oxley Act forbids use of an audit committee by the board of a publicly held corporation; the full board must oversee the work of the public accounting firm employed to audit the corporate books.

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

A proxy is effective until the shareholder revokes it.

The Revised Act provides that every shareholder is entitled to examine specified corporate records upon prior signed written request if the demand is made in good faith, for a proper purpose, and during regular business hours at the corporation's principal office.

The role of shareholders in managing the corporation is generally restricted to:

MegaValue Corporation requires a quorum of five directors.If Branson, a director, shows up at the meeting for a vote on his favorite topic (dividends) and withdraws thereafter, leaving only four directors, they, under the Revised Act, may not act on any further business.

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

The board of directors of a corporation:

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

The Investor Protection and Securities Reform Act of 2010 imposes new corporate governance rules on both publicly held and privately held companies.

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

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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