Question 1

What remedy will be imposed on Tatiana,if any,for her home kite sales?

Accepted Answer

A)  She will be required to cede to the corporation only profits she earned as a result of the breach that the corporation can prove by a preponderance of the evidence it lost as a result of her actions.
B)  She will be required to cede to the corporation half of any profits she earned as a result of the breach.
C)  She will be required to cede to the corporation any profits she earned as a result of the breach unless she can by a preponderance of the evidence prove that the corporation lost no sales as a result of her actions.
D)  She will be required to cede to the corporation all the profits she earned as a result of the breach.
E)  Nothing because Tatiana did not engage in any wrongdoing.F) A) and C)
G) B) and E)

Question 2

Which of the following,if any,is an authorization of a shareholder to allow someone else to vote in his or her place?

Accepted Answer

A)  Permissive voucher
B)  Proxy
C)  Approval
D)  Acknowledgement
E)  There is no such document because a shareholder may not allow someone else to vote in the shareholder's place.F) A) and B)
G) A) and E)

Question 3

A director may be removed for which of the following reasons?

Accepted Answer

A)  At the will of the president.
B)  For cause.
C)  In the discretion of the shareholders upon a two-thirds vote.
D)  In the discretion of other directors upon a majority vote.
E)  In the discretion of the shareholders upon majority vote.F) A) and E)
G) B) and D)

Question 4

Directors who are also officers or employees of the corporation are known as which of the following?

Accepted Answer

A)  Unaffiliated directors
B)  Outside directors
C)  Approved directors
D)  Affiliated directors
E)  Inside directorsF) A) and C)
G) B) and C)

Question 5

How are directors typically chosen after the incorporation process?

Accepted Answer

A)  By a unanimous vote of the shareholders.
B)  By majority vote of the shareholders.
C)  By majority vote of all officers.
D)  The president appoints them in his or her discretion.
E)  By a two-thirds vote of shareholders.F) B) and C)
G) C) and D)

Question 6

The Revised Model Business Corporation Act forbids directors' meetings being held via telephone.

Accepted Answer

A) True 
 B)False

Question 7

If a corporation has fewer than ________ shareholders,the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Accepted Answer

A)  100
B)  10
C)  50
D)  30
E)  25F) A) and C)
G) B) and E)

Question 8

If the corporate bylaws require a minimum of five directors to be present at each directors meeting,what happens if only two directors attend and they make a decision?

Accepted Answer

A)  The decision is invalid because a quorum was lacking.
B)  The decision is invalid because the directors did not have authority to vote
C)  The decision is invalid unless shareholders vote to ratify
D)  The decision is valid
E)  The decision is invalid because of a violation of the business judgment ruleF) A) and D)
G) D) and E)

Question 9

The right of a corporation or its shareholder to purchase any shares of stock offered for resale by a shareholder within a specified period of time is referred to as which of the following?

Accepted Answer

A)  Right of first purchase
B)  Right of adequate refusal
C)  Right of first acknowledgement
D)  Right of first refusal
E)  Superior right of purchaseF) A) and B)
G) B) and E)

Question 10

There are four rights of directors explained in the text.Please list and describe each of these four rights.

Accepted Answer

The rights of compensation,participation...

Question 11

Which of the following are outside directors who do not have business contacts with the corporation?

Accepted Answer

A)  Associated directors
B)  Inside directors
C)  Approved directors
D)  Affiliated directors
E)  Unaffiliated directorsF) C) and E)
G) B) and D)

Question 12

What duty,if any,did Tatiana violate?

Accepted Answer

A)  She violated the duty of profit maximization.
B)  She did not commit any violation.
C)  She violated the duty of loyalty.
D)  She violated the duty of care.
E)  She violated the duty of understanding.F) All of the above
G) A) and E)

Question 13

Which statement accurately describes how directors are chosen during incorporation?

Accepted Answer

A)  Prior to incorporation,either the incorporators appoint them or the corporate articles name them.
B)  Prior to incorporation,directors may only be named by the corporate articles naming them.
C)  Prior to incorporation,either the incorporators appoint them or by a majority vote of the shareholders.
D)  Prior to incorporation,directors may only be named through the incorporators appointing them.
E)  Prior to incorporation,directors may only be named by the president appointing them.F) B) and E)
G) B) and C)

Question 14

In a closely held corporation,a breach of the duty of a majority shareholder to act with care and loyalty when selling his or her shares is known as ________.

Accepted Answer

A)  Minority oppression
B)  Oppressive conduct
C)  Majority holder misconduct
D)  Disloyal procedure
E)  Minority discriminationF) A) and D)
G) A) and C)

Question 15

An individual shareholder can enter a voting trust in which he or she transfers share titles to a trustee in exchange for a ________.

Accepted Answer

A)  Proxy
B)  Voting trust certificate
C)  Voting acknowledgement
D)  Trustee voting agreement
E)  Trust acknowledgementF) B) and C)
G) None of the above

Question 16

What type of interest does every shareholder have in a corporation?

Accepted Answer

A)  Equity
B)  Majority
C)  Absolute
D)  Preferred
E)  MinorityF) C) and E)
G) B) and D)

Question 17

Which of the following is true of a shareholder's legal duties.

Accepted Answer

A)  Shareholders typically have few legal duties,but minority shareholders can sometimes have fiduciary duties to the corporation and to majority shareholders
B)  Shareholders have a fiduciary duty to each other,but not to the corporation.
C)  No shareholders ever have any legal duties
D)  Shareholders typically have few legal duties,but majority shareholders can sometimes have fiduciary duties to the corporation and to minority shareholders
E)  All shareholders have a fiduciary duty not to compete with the companyF) A) and B)
G) A) and C)

Question 18

Which of the following gives preference to shareholders to purchase shares of a new issue of stock?

Accepted Answer

A)  Superior rights
B)  Preemptive rights
C)  Acknowledged rights
D)  Benefit rights
E)  Selective rightsF) B) and E)
G) D) and E)

Question 19

If a director makes a decision that inadvertently harms the company,shareholders can hold the director liable for the bad decision under all circumstances.

Accepted Answer

A) True 
 B)False

Question 20

A shareholder who signs a stock subscription must pay which of the following for no-par shares?

Accepted Answer

A)  The value as set by the board of directors
B)  The fair market value of the shares
C)  The value on the last sale
D)  The value as voted upon by shareholders
E)  The depreciated valueF) A) and D)
G) B) and E)

Exam 39: Corporations: Directors, officers, and Shareholders

If a corporation has fewer than ________ shareholders,the Revised Model Business Corporation Act allows companies to eliminate the board of directors entirely.

Correct AnswerverifiedShow Answer

What type of interest does every shareholder have in a corporation?

Correct AnswerverifiedShow Answer

If a director makes a decision that inadvertently harms the company,shareholders can hold the director liable for the bad decision under all circumstances.

Correct AnswerverifiedShow Answer

An individual shareholder can enter a voting trust in which he or she transfers share titles to a trustee in exchange for a ________.

Correct AnswerverifiedShow Answer

What duty,if any,did Tatiana violate?

Correct AnswerverifiedShow Answer

What remedy will be imposed on Tatiana,if any,for her home kite sales?

Correct AnswerverifiedShow Answer

Which of the following gives preference to shareholders to purchase shares of a new issue of stock?

Correct AnswerverifiedShow Answer

A shareholder who signs a stock subscription must pay which of the following for no-par shares?

Correct AnswerverifiedShow Answer

How are directors typically chosen after the incorporation process?

Correct AnswerverifiedShow Answer

Which statement accurately describes how directors are chosen during incorporation?

Correct AnswerverifiedShow Answer

The right of a corporation or its shareholder to purchase any shares of stock offered for resale by a shareholder within a specified period of time is referred to as which of the following?

Correct AnswerverifiedShow Answer

If the corporate bylaws require a minimum of five directors to be present at each directors meeting,what happens if only two directors attend and they make a decision?

Correct AnswerverifiedShow Answer

A director may be removed for which of the following reasons?

Correct AnswerverifiedShow Answer

In a closely held corporation,a breach of the duty of a majority shareholder to act with care and loyalty when selling his or her shares is known as ________.

Correct AnswerverifiedShow Answer

Which of the following,if any,is an authorization of a shareholder to allow someone else to vote in his or her place?

Correct AnswerverifiedShow Answer

There are four rights of directors explained in the text.Please list and describe each of these four rights.

Correct AnswerverifiedThe rights of compensation,participation...View AnswerShow Answer

The Revised Model Business Corporation Act forbids directors' meetings being held via telephone.

Correct AnswerverifiedShow Answer

Which of the following are outside directors who do not have business contacts with the corporation?

Correct AnswerverifiedShow Answer

Directors who are also officers or employees of the corporation are known as which of the following?

Correct AnswerverifiedShow Answer

Which of the following is true of a shareholder's legal duties.

Correct AnswerverifiedShow Answer

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The rights of compensation,participation...
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