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Exam 34: Corporate Directors, Officers, and Shareholders

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Question 31

True/False

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Corporate officers do not act as agents of the corporation.

A) True
B) False

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Question 32

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How many directors serve on a corporation's board can be set forth in the corporation's bylaws.

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B) False

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Question 33

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To avoid potential liability for misconduct in corporate operations, directors can refrain from reasonable supervision of work delegated to

The primary function of a corporation's officers is to authorize major corporate policy decisions.

Under the business judgment rule, directors cannot be held liable for the negligence or mismanagement of corporate personnel.

With respect to a corporation, an officer's rights are defined by

Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes

A director who becomes involved in litigation because of his or her position has no right to be indemnified for the costs.

With respect to a corporation, a director is

Directors are not answerable to the corporation for breaching their duty of care.

Han is a shareholder of Insulation Inc. When the directors fail to undertake an action to redress a wrong suffered by the firm, Han files a suit on its behalf. Any damages recovered by the suit will go to the firm's

Molly is a director and Ned is an officer of Online Education Inc. Liability for the torts of employees under their supervision may extend to

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

Directors have a right to be notified of all board meetings.

If a board attempts to manipulate the shareholders' election of a director to reduce the shareholders' influence, they can challenge the election in court.

Because of their positions within the corporation, directors must make full disclosure of any conflicts of interest with respect to corporate contracts.

AstroStar, Inc.'s board of directors consists of three members-Eckhart, Dolan, and Macero. At a regular board meeting, the board selects Galiard as president of the corporation. Later, an audit reveals that during his term as president he has openly embezzled $500,000 from AstroStar. The same audit reveals that the board knew when it selected Galiard that he had been previously convicted of embezzlement. Can the corporation hold directors Eckhart, Dolan, and Macero personally liable?

Dhani, Ezra, and Finn are the first directors on the board of Global Trading Corporation. Subsequent directors will be elected by a majority vote of Global's

Corporate officers have responsibility for all policymaking decisions necessary to the management of corporate affairs.

A corporate officer is liable to the corporation or its shareholders for a bad business decision.