Exam 35: Management Structure of Corporations

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:

If shareholders agree in writing to vote in a specified manner for election or removal of directors, this is known as:

Regarding the election of directors:

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.

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

Assume there are no provisions in the corporation's articles of incorporation or bylaws regarding quorum requirements. If there are 13 total directors of General Grain Corporation and the minimum number of directors are present to transact business, how many votes normally would be necessary for those present to act as a board?

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

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.

Directors who are also officers or employees of a publicly held corporation are "affiliated directors."

Special shareholder meetings may be called by:

Discuss whether officers and directors may entrust important work to others and their potential liability if they do.

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

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.

Most states, as well as the Revised Act, hold that the test for the duty of diligence requires a director or officer to discharge corporate duties:

The board determines corporate policy in a number of areas, including:

As the shareholders' elected representatives, the board of directors are delegated the power to direct the business of the corporation.

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

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

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.

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