Question 1

Vernon and David are the controlling shareholders in E-treme,Inc.Discuss the obligations that Vernon and David owe to the minority shareholders.

Accepted Answer

As controlling shareholders,they may not enter into unfair business transactions with the corporation;they have a fiduciary duty to minority shareholders;they may not exclude minority shareholders from beneficial arrangements involving stock;and they are prohibited from expelling minority shareholders,unless the expulsion is done for a legitimate business purpose and a fair price is paid for their stock.

Question 2

A corporation must obtain shareholder approval before the company

Accepted Answer

A) sells off a major portion of its business to another company. 
B) opens additional offices. 
C) hires or fires a significant number of employees. 
D) expands into foreign markets. 
A) sells off a major portion of its business to another company. 
B) opens additional offices. 
C) hires or fires a significant number of employees. 
D) expands into foreign markets. A

Question 3

In reality,the officers of the large corporations have a great deal of influence on who will be nominated and elected as directors.

Accepted Answer

A) True 
 B)False  True

Question 4

A "fundamental change" in a corporation would be illustrated by

Accepted Answer

A) E-prise,Inc.merging with Vitta Corporation. 
B) E-prise electing new members to the board. 
C) Vitta Corporation adding a new product to its product line. 
D) Vitta Corporation setting the date for its annual meeting. 
A) E-prise,Inc.merging with Vitta Corporation. 
B) E-prise electing new members to the board. 
C) Vitta Corporation adding a new product to its product line. 
D) Vitta Corporation setting the date for its annual meeting.

Question 5

Benjamin sits on the board of directors of Litman Corporation.He has the support of only 30 percent of Litman's shareholders.Benjamin is best characterized as a(n)

Accepted Answer

A) independent director. 
B) zombie director. 
C) inside director. 
D) outside director. 
A) independent director. 
B) zombie director. 
C) inside director. 
D) outside director.

Question 6

Kris,a shareholder of E-Max,Inc. ,claimed that the business was being mismanaged.Kris notified the board of directors that the corporation has been wronged and asked the board to bring suit in the name of the corporation directly.In response to Kris's demand,what actions may the board take? What could Kris's response be to each alternative?

Accepted Answer

The board has three choices:​
1.It can a

Question 7

Maureen,a shareholder of Metra,Inc. ,is unhappy with how the corporation is being managed.Maureen wants the company to sell off its unproductive divisions.Which statement is correct?

Accepted Answer

A) If Maureen owns at least 1 percent or $2,000 of Metra's stock,she can require the company to include her proposal in its proxy statement. 
B) If Maureen has a proper purpose,she can require the company to include her proposal in its proxy statement. 
C) If Maureen can show cause,she can require the company to automatically sell off its unproductive divisions. 
D) Maureen cannot require that the company put her proposal to sell off unproductive divisions on its proxy statement. 
A) If Maureen owns at least 1 percent or $2,000 of Metra's stock,she can require the company to include her proposal in its proxy statement. 
B) If Maureen has a proper purpose,she can require the company to include her proposal in its proxy statement. 
C) If Maureen can show cause,she can require the company to automatically sell off its unproductive divisions. 
D) Maureen cannot require that the company put her proposal to sell off unproductive divisions on its proxy statement.

Question 8

Lucy owns 10 shares of stock in Quamba,Inc.Lucy wishes to place a proposal in a company's proxy statement to be voted on at the shareholders' meeting.Pursuant to the SEC rules,before Lucy is allowed to place her proposal on the proxy statement,she must

Accepted Answer

A) have owned continuously for one year at least 1 percent of the company and $2,000 or more of the stock. 
B) have owned continuously for one year at least 1 percent of the company or $2,000 or more of the stock. 
C) have the permission of the board of directors. 
D) have been a stockholder for at least two years. 
A) have owned continuously for one year at least 1 percent of the company and $2,000 or more of the stock. 
B) have owned continuously for one year at least 1 percent of the company or $2,000 or more of the stock. 
C) have the permission of the board of directors. 
D) have been a stockholder for at least two years.

Question 9

List and describe the various rules that apply to fundamental corporate changes requiring shareholder approval.

Accepted Answer

A corporation must seek shareholder appr

Question 10

If a public company decides not to solicit proxies for a shareholder meeting,it need not give shareholders the information that would have been required in a proxy statement.

Accepted Answer

A) True 
 B)False

Question 11

Explain the ways in which the federal government has tried to change the landscape of corporate governance and executive compensation.

Accepted Answer

The federal government has tried to chan

Question 12

Under the Model Act,who has the right to call a special meeting of the shareholders to vote on an emergency issue that cannot wait until the next annual meeting?

Accepted Answer

A) The board of directors and shareholders who own at least 10 percent of a company's stock 
B) Any group of shareholders that is at least 25 in number and holds 25 percent of a company's stock 
C) The board of directors and the CEO 
D) Only the board of directors 
A) The board of directors and shareholders who own at least 10 percent of a company's stock 
B) Any group of shareholders that is at least 25 in number and holds 25 percent of a company's stock 
C) The board of directors and the CEO 
D) Only the board of directors

Question 13

Loraine is a shareholder of Taley Corp.She would like to inspect and copy the company's minute book,accounting records,and shareholder lists.Under what circumstances is Loraine allowed to inspect or copy corporate records?

Accepted Answer

A company's obligation to provide shareh

Question 14

Shareholders must begin the litigation process by asking the board of directors to bring suit,an action called

Accepted Answer

A) proxy access. 
B) proper purpose. 
C) making demand. 
D) benchmarking. 
A) proxy access. 
B) proper purpose. 
C) making demand. 
D) benchmarking.

Question 15

At least once every three years,companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives.This is referred to as

Accepted Answer

A) clawback pay action. 
B) voting out the directors. 
C) activist investing. 
D) say-on-pay. 
A) clawback pay action. 
B) voting out the directors. 
C) activist investing. 
D) say-on-pay.

Question 16

Luella just purchased five shares of common stock in TriColor,Inc.for $250.Luella has the right to

Accepted Answer

A) manage the day-to-day business of the corporation. 
B) set executive compensation. 
C) require that a proposal be placed in the company's proxy statement to be voted on at the shareholder meeting. 
D) vote to elect directors. 
A) manage the day-to-day business of the corporation. 
B) set executive compensation. 
C) require that a proposal be placed in the company's proxy statement to be voted on at the shareholder meeting. 
D) vote to elect directors.

Question 17

The percentage of voters who must be present for a meeting to count is referred to as

Accepted Answer

A) a plurality. 
B) simple majority. 
C) a quorum. 
D) a proxy. 
A) a plurality. 
B) simple majority. 
C) a quorum. 
D) a proxy.

Question 18

What is an inside director?

Accepted Answer

A) a shareholder charged with the illegal act of insider trading 
B) a member of the board of directors who is also a board member of a competing firm 
C) a shareholder who is a board member of a competing firm 
D) a member of the board of directors who is also an employee of the corporation 
A) a shareholder charged with the illegal act of insider trading 
B) a member of the board of directors who is also a board member of a competing firm 
C) a shareholder who is a board member of a competing firm 
D) a member of the board of directors who is also an employee of the corporation

Question 19

In a derivative lawsuit,any proceeds awarded by the court must be paid to the corporation,not the shareholders themselves.

Accepted Answer

A) True 
 B)False

Question 20

Kian is the chief financial officer of Yonkka,Inc.He is also a member of Yonkka's board of directors.Kian is

Accepted Answer

A) an inside director. 
B) an outside director. 
C) holding an illegal position. 
D) a public director. 
A) an inside director. 
B) an outside director. 
C) holding an illegal position. 
D) a public director.

Exam 35: Shareholder Rights

Vernon and David are the controlling shareholders in E-treme,Inc.Discuss the obligations that Vernon and David owe to the minority shareholders.

A corporation must obtain shareholder approval before the company

In reality,the officers of the large corporations have a great deal of influence on who will be nominated and elected as directors.

A "fundamental change" in a corporation would be illustrated by

Benjamin sits on the board of directors of Litman Corporation.He has the support of only 30 percent of Litman's shareholders.Benjamin is best characterized as a(n)

Maureen,a shareholder of Metra,Inc. ,is unhappy with how the corporation is being managed.Maureen wants the company to sell off its unproductive divisions.Which statement is correct?

Lucy owns 10 shares of stock in Quamba,Inc.Lucy wishes to place a proposal in a company's proxy statement to be voted on at the shareholders' meeting.Pursuant to the SEC rules,before Lucy is allowed to place her proposal on the proxy statement,she must

List and describe the various rules that apply to fundamental corporate changes requiring shareholder approval.

If a public company decides not to solicit proxies for a shareholder meeting,it need not give shareholders the information that would have been required in a proxy statement.

Explain the ways in which the federal government has tried to change the landscape of corporate governance and executive compensation.

Under the Model Act,who has the right to call a special meeting of the shareholders to vote on an emergency issue that cannot wait until the next annual meeting?

Loraine is a shareholder of Taley Corp.She would like to inspect and copy the company's minute book,accounting records,and shareholder lists.Under what circumstances is Loraine allowed to inspect or copy corporate records?

Shareholders must begin the litigation process by asking the board of directors to bring suit,an action called

At least once every three years,companies must take a nonbinding shareholder vote on the compensation of the five highest-paid executives.This is referred to as

Luella just purchased five shares of common stock in TriColor,Inc.for $250.Luella has the right to

The percentage of voters who must be present for a meeting to count is referred to as

What is an inside director?

In a derivative lawsuit,any proceeds awarded by the court must be paid to the corporation,not the shareholders themselves.

Kian is the chief financial officer of Yonkka,Inc.He is also a member of Yonkka's board of directors.Kian is

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Consideration

Legality

Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Contract Termination

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Starting a Business: Llcs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

Bankruptcy

Securities Regulation

Antitrust

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Environmental Law

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Personal Property and Bailment

Planning for the Future: Wills, Trusts and Insurance

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