Question 1

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.E) B) and C)
F) None of the above

Question 2

Determining the names of other shareholders in order to communicate with them about corporate affairs is a "proper purpose" for a shareholder to inspect the books and records of a corporation.

Accepted Answer

A) True 
 B)False

Question 3

Directors have the power to bind the corporation when acting individually rather than as a board.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)   a proxy.
B)   cumulative voting.
C)   a voting trust.
D)   a shareholder voting agreement.E) A) and B)
F) A) and D)

Question 5

A proxy is effective until the shareholder revokes it.

Accepted Answer

A) True 
 B)False

Question 6

Arthur is a shareholder of Sigma Corp. 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 a(n) :

Accepted Answer

A)   direct suit.
B)   derivative suit.
C)   class action suit.
D)   unauthorized suit.E) A) and B)
F) A) and C)

Question 7

Federal statutes prohibit officers and directors from purchasing or selling shares of their corporation's stock without adequately disclosing all material facts in their possession that may affect the stock's actual or potential value.

Accepted Answer

A) True 
 B)False

Question 8

Directors are elected at the annual meeting of shareholders.

Accepted Answer

A) True 
 B)False

Question 9

Shares in a publicly held corporation typically are:

Accepted Answer

A)   owned mostly by management of the corporation.
B)   widely dispersed and about two-thirds are held by institutional investors.
C)   owned by a few investors holding many shares each.
D)   owned mostly by individual investors, and these investors usually exercise their right to vote by attending shareholder meetings.E) B) and C)
F) All of the above

Question 10

Officers and directors of a corporation owe to the corporation the subordination of their self-interest to the interest of the corporation and owe constant loyalty to the corporation. This duty is the:

Accepted Answer

A)   fiduciary duty.
B)   business judgment duty.
C)   duty of indemnification.
D)   duty of diligence.E) C) and D)
F) A) and D)

Question 11

A shareholder may bring a derivative suit on behalf of the corporation and any recovery usually goes to the corporation's treasury, or a shareholder may bring a direct suit to enforce a claim he has against the corporation based on his ownership of shares and any recovery goes to the shareholder plaintiff.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is the effect of the business judgment rule regarding the liability of officers and directors?

Accepted Answer

A)   Courts will not substitute their judgment for that of the board or an officer acting in good faith with due care.
B)   Officers and directors will never have liability for their decisions relating to the corporation.
C)   Officers and directors may have liability for bad faith decisions, but cannot be liable for failure to act.
D)   Directors and officers will not be held liable for conduct that is only negligent.E) All of the above
F) C) and D)

Question 13

Morales, president of Tradewind Industries, Inc., would have actual implied authority to:

Accepted Answer

A)   issue corporate stock.
B)   remove a vice-president of the company from office.
C)   bind the company in a sale in the ordinary course of the company business.
D)   set the amount for production bonuses of the other officers.E) C) and D)
F) A) and D)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The officers and the directors are fiduciaries of the corporation, but the business judgment rule will not preclude liability on officers and directors for honest mistakes of judgment.

Accepted Answer

A) True 
 B)False

Question 16

A shareholder may not vote without being at the shareholder meeting.

Accepted Answer

A) True 
 B)False

Question 17

The board of directors is delegated the power to manage the business of the corporation, which includes:

Accepted Answer

A)   determining the capital structure and financial policy of the corporation.
B)   declaring the amount and type of dividends.
C)   formulating major management policy.
D)   All of these.E) All of the above
F) A) and B)

Question 18

The shareholders elect the key corporate officers.

Accepted Answer

A) True 
 B)False

Question 19

George is a shareholder in the Muncy Kempf Corporation. He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders. A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

Accepted Answer

A) True 
 B)False

Question 20

Voting trusts generally are effective for only one year.

Accepted Answer

A) True 
 B)False

Exam 35: Management Structure

Federal statutes prohibit officers and directors from purchasing or selling shares of their corporation's stock without adequately disclosing all material facts in their possession that may affect the stock's actual or potential value.

Correct Answer
verified

Shares in a publicly held corporation typically are:

Correct Answer
verified

Correct Answer
verified

The board of directors is delegated the power to manage the business of the corporation, which includes:

Correct Answer
verified

Which of the following is the effect of the business judgment rule regarding the liability of officers and directors?

Correct Answer
verified

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

Correct Answer
verified

George is a shareholder in the Muncy Kempf Corporation. He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders. A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

Correct Answer
verified

A shareholder may not vote without being at the shareholder meeting.

Correct Answer
verified

Voting trusts generally are effective for only one year.

Correct Answer
verified

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

Correct Answer
verified

Determining the names of other shareholders in order to communicate with them about corporate affairs is a "proper purpose" for a shareholder to inspect the books and records of a corporation.

Correct Answer
verified

Officers and directors of a corporation owe to the corporation the subordination of their self-interest to the interest of the corporation and owe constant loyalty to the corporation. This duty is the:

Correct Answer
verified

A proxy is effective until the shareholder revokes it.

Correct Answer
verified

Directors are elected at the annual meeting of shareholders.

Correct Answer
verified

The shareholders elect the key corporate officers.

Correct Answer
verified

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

Correct Answer
verified

The officers and the directors are fiduciaries of the corporation, but the business judgment rule will not preclude liability on officers and directors for honest mistakes of judgment.

Correct Answer
verified

Morales, president of Tradewind Industries, Inc., would have actual implied authority to:

Correct Answer
verified

Directors have the power to bind the corporation when acting individually rather than as a board.

Correct Answer
verified

Correct Answer
verified

Exam 35: Management Structure

Federal statutes prohibit officers and directors from purchasing or selling shares of their corporation's stock without adequately disclosing all material facts in their possession that may affect the stock's actual or potential value.

Correct AnswerverifiedShow Answer

Shares in a publicly held corporation typically are:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The board of directors is delegated the power to manage the business of the corporation, which includes:

Correct AnswerverifiedShow Answer

Which of the following is the effect of the business judgment rule regarding the liability of officers and directors?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

George is a shareholder in the Muncy Kempf Corporation. He learns of insider trading by one of the directors and wants to sue the corporation on behalf of the corporation and its shareholders. A shareholder cannot sue the corporation to enforce a right belonging to the corporation.

Correct AnswerverifiedShow Answer

A shareholder may not vote without being at the shareholder meeting.

Correct AnswerverifiedShow Answer

Voting trusts generally are effective for only one year.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Determining the names of other shareholders in order to communicate with them about corporate affairs is a "proper purpose" for a shareholder to inspect the books and records of a corporation.

Correct AnswerverifiedShow Answer

Officers and directors of a corporation owe to the corporation the subordination of their self-interest to the interest of the corporation and owe constant loyalty to the corporation. This duty is the:

Correct AnswerverifiedShow Answer

A proxy is effective until the shareholder revokes it.

Correct AnswerverifiedShow Answer

Directors are elected at the annual meeting of shareholders.

Correct AnswerverifiedShow Answer

The shareholders elect the key corporate officers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The officers and the directors are fiduciaries of the corporation, but the business judgment rule will not preclude liability on officers and directors for honest mistakes of judgment.

Correct AnswerverifiedShow Answer

Morales, president of Tradewind Industries, Inc., would have actual implied authority to:

Correct AnswerverifiedShow Answer

Directors have the power to bind the corporation when acting individually rather than as a board.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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