Question 1

While incorporating,the future owners of the corporation want to restrict stock transferability to ensure that existing shareholders have the right to buy any shares of stock offered for sale by a shareholder within a specified time period.The right they should establish in their corporate bylaws is referred to as the ________.

Accepted Answer

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

Question 2

Which groups owe a duty of care to the corporation,and what does that duty require?

Accepted Answer

Directors and officers owe a duty of car...

Question 3

Is Allison correct that officers cannot be held criminally responsible for actions they take on behalf of a corporation?

Accepted Answer

A)  She is incorrect.
B)  She is correct only so long as the corporation is solvent.
C)  She is correct only if the board of directors has accepted all liability for acts of officers.
D)  Yes,she is correct.
E)  She is correct only if environmental or employment matters are involved.F) C) and D)
G) B) and C)

Question 4

While ordinary decisions made by directors require a ________ vote,more important decisions sometimes require a vote.

Accepted Answer

A)  Majority;three-fourths
B)  Two-thirds;three-fourths
C)  One-third;majority
D)  Majority;unanimous
E)  Majority;two-thirdsF) A) and B)
G) C) and E)

Question 5

The requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid is which of the following?

Accepted Answer

A)  Substantial assembly
B)  Adequate assembly
C)  A Quorum
D)  Adequate group
E)  Substantial groupF) B) and C)
G) None of the above

Question 6

Typically shareholders use a majority vote to elect directors.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following was the result on appeal in McCann v.McCann,the case in the text involving whether a corporation engaged in a "squeeze-out" as to a minority shareholder?

Accepted Answer

A)  That a material question of fact as to whether the directors could be found to have engaged in a "squeeze-out" of the beneficiary,causing him harm beyond every other shareholder,and that the case would be remanded for further proceedings.
B)  That the business judgment rule does not apply in such situations and that so long as there is any business reason for a transaction,a corporation cannot be found liable for a "squeeze-out" resulting in dismissal of the plaintiff's claims.
C)  That because he owned over 20% of the stock,the failure to grant the complaining minority shareholder a seat on the board in and of itself was sufficient under the facts presented to establish that the corporation was guilty of behavior constituting an illegal "squeeze-out."
D)  That while the business judgment rule applied,the corporation submitted sufficient evidence to establish legitimate reasons for all questioned transactions and that it,therefore,could not be held liable to the complaining minority shareholder.
E)  That the failure to declare a dividend when sufficient assets existed with which to do so in and of itself was sufficient under the facts presented to establish that the corporation was guilty of behavior constituting an illegal "squeeze-out."F) A) and D)
G) C) and D)

Question 8

A director of a corporation knowingly releases a dangerous drug that will kill 10 percent of those who take the medication.He was concerned when the drug was being developed so he told the head of medical testing not to let him know if the drug had any adverse side effects.Since he was not told of the side effects,he felt he could not be required to report them to the FDA.Which of the following is true of his liability?

Accepted Answer

A)  He cannot be held responsible because he was unaware of the dangers of the drug.
B)  He cannot be held responsible if the board of directors approved the release of the drug.
C)  He cannot be held responsible because the corporation released the drug.
D)  He cannot be held responsible because the illegal actions of hiding the drug's side effects were done by a subordinate.
E)  He can be held responsible for his own torts and crimes and for the crimes of other employees whom they have failed to adequately supervise.F) All of the above
G) C) and D)

Question 9

Which of the following is true of the business judgment rule?

Accepted Answer

A)  It protects directors and officers from ever being held accountable for bad decisions.
B)  It protects shareholders.
C)  It encourages individuals to serve as directors.
D)  It is an exception to the fiduciary duty of board members.
E)  It applies in insider trading cases.F) B) and E)
G) A) and E)

Question 10

Directors each have one vote.

Accepted Answer

A) True 
 B)False

Exam 39: Corporations: Directors, officers, and Shareholders

The requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid is which of the following?

Correct Answer
verified

Correct Answer
verified

Typically shareholders use a majority vote to elect directors.

Correct Answer
verified

Which groups owe a duty of care to the corporation,and what does that duty require?

Correct Answer
verified
Directors and officers owe a duty of car...
View Answer

Which of the following was the result on appeal in McCann v.McCann,the case in the text involving whether a corporation engaged in a "squeeze-out" as to a minority shareholder?

Correct Answer
verified

Is Allison correct that officers cannot be held criminally responsible for actions they take on behalf of a corporation?

Correct Answer
verified

Which of the following is true of the business judgment rule?

Correct Answer
verified

Directors each have one vote.

Correct Answer
verified

Correct Answer
verified

While ordinary decisions made by directors require a ________ vote,more important decisions sometimes require a vote.

Correct Answer
verified

Exam 39: Corporations: Directors, officers, and Shareholders

The requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid is which of the following?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Typically shareholders use a majority vote to elect directors.

Correct AnswerverifiedShow Answer

Which groups owe a duty of care to the corporation,and what does that duty require?

Correct AnswerverifiedDirectors and officers owe a duty of car...View AnswerShow Answer

Which of the following was the result on appeal in McCann v.McCann,the case in the text involving whether a corporation engaged in a "squeeze-out" as to a minority shareholder?

Correct AnswerverifiedShow Answer

Is Allison correct that officers cannot be held criminally responsible for actions they take on behalf of a corporation?

Correct AnswerverifiedShow Answer

Which of the following is true of the business judgment rule?

Correct AnswerverifiedShow Answer

Directors each have one vote.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

While ordinary decisions made by directors require a ________ vote,more important decisions sometimes require a vote.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Directors and officers owe a duty of car...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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