Question 1

The statutory authority granted to the board of directors to manage the business and affairs of the corporation is absolute and may not be limited in any way by the articles of incorporation or the corporate shareholders.

Accepted Answer

A) True 
 B)False

Question 2

Directors are granted the statutory right to receive compensation for their services.

Accepted Answer

A) True 
 B)False

Question 3

A(n) _________ may be brought by one or more shareholders to enforce a corporate right, or to remedy a wrong to the corporation when the directors of the corporation fail or refuse to take appropriate action.

Accepted Answer

A)   derivative action
B)   class action
C)   representative action
D)   individual shareholder actionE) A) and D)
F) A) and C)

Question 4

Under the business judgment rule, directors may not be found personally liable to the corporation or third parties for their fraudulent acts if those acts were made on behalf of the corporation.

Accepted Answer

A) True 
 B)False

Question 5

The issuance of stock of a corporation sometimes requires shareholder approval.

Accepted Answer

A) True 
 B)False

Question 6

A director may be personally liable for damag- es caused by

Accepted Answer

A)   his or her failure to make the correct busi- ness decision.
B)   his or her actions beyond the scope of the director's duty.
C)   fraudulent or tortious acts committed by the others in the corporation that the director was reasonably unaware of.
D)   his or her failure to vote on matters that personally involve the director.E) All of the above
F) None of the above

Question 7

With the possible exception of statutory close corporations, all business corporations are required to elect a board of directors and to have a board of directors at all times.

Accepted Answer

A) True 
 B)False

Question 8

Directors may be removed by the officers of the corporation.

Accepted Answer

A) True 
 B)False  False

Question 9

A quorum is the minimum number of individuals who must be present or represented at a meeting as a prerequisite to the valid transaction of business.

Accepted Answer

A) True 
 B)False

Question 10

The agenda for a meeting of the shareholders of a corporation would not usually include

Accepted Answer

A)   ratification of the acts of the board of direc- tors for the previous year.
B)   election of the corporation's officers.
C)   election of the corporation's directors for the upcoming year.
D)   amendments to the articles of incorporation.E) B) and D)
F) C) and D)

Question 11

A(n) _______ is an action brought by a share- holder on behalf of the shareholder and his or her entire class of shareholders against the cor- poration stemming from a cause of action belonging personally to the shareholder and the class the shareholder represents.

Accepted Answer

A)   derivative action
B)   class action
C)   representative action
D)   individual shareholder actionE) B) and C)
F) A) and B)

Question 12

The board of directors may not appoint a com- mittee to

Accepted Answer

A)   oversee the compensation of the corpora- tion's officers and directors.
B)   supervise the audit of the corporation's financial statements.
C)   oversee any litigation the business may be involved in.
D)   authorize dividends or distributions to the shareholders of the corporation.E) B) and C)
F) A) and B)

Question 13

Corporate directors may be found personally liable for their poor business decisions that adversely affect the corporation, even if those decisions are made with diligence and in good faith.

Accepted Answer

A) True 
 B)False

Question 14

A ___________is the authority given by a share- holder to another to exercise the shareholder's voting rights.

Accepted Answer

A)   proxy
B)   ballot
C)   quorum
D)   voting grantE) A) and B)
F) A) and C)

Question 15

Corporate managers often enact corporate compliance programs to help prevent and de- tect criminal conduct within their corporations.

Accepted Answer

A) True 
 B)False

Question 16

The board of directors of a public corporation has oversight responsibility for the corpora- tion's business performance and plans.

Accepted Answer

A) True 
 B)False

Question 17

Misconduct by corporate executives can result in criminal prosecution of both the executives and the corporation.

Accepted Answer

A) True 
 B)False

Question 18

Reimbursement by a corporation to its officers and directors who are named as defendants in litigation involving the corporation for their expenses incurred in defending themselves is referred to as

Accepted Answer

A)   litigation reimbursement.
B)   director reimbursement.
C)   personal liability reimbursement.
D)   indemnification.E) C) and D)
F) A) and B)

Question 19

The method of voting that gives minority shareholders the right to cumulate their votes and increase their chances of electing a director is called

Accepted Answer

A)   preemptive voting rights.
B)   voting by ballot.
C)   cumulative voting.
D)   minority shareholder voting.E) B) and D)
F) B) and C) C

Question 20

In states following the Model Business Corporation Act, corporations must have a board of directors that consists of at least three directors.

Accepted Answer

A) True 
 B)False  False

Exam 9: The Corporate Organization

The statutory authority granted to the board of directors to manage the business and affairs of the corporation is absolute and may not be limited in any way by the articles of incorporation or the corporate shareholders.

Correct AnswerverifiedShow Answer

Directors are granted the statutory right to receive compensation for their services.

Correct AnswerverifiedShow Answer

A(n) _________ may be brought by one or more shareholders to enforce a corporate right, or to remedy a wrong to the corporation when the directors of the corporation fail or refuse to take appropriate action.

Correct AnswerverifiedShow Answer

Under the business judgment rule, directors may not be found personally liable to the corporation or third parties for their fraudulent acts if those acts were made on behalf of the corporation.

Correct AnswerverifiedShow Answer

The issuance of stock of a corporation sometimes requires shareholder approval.

Correct AnswerverifiedShow Answer

A director may be personally liable for damag- es caused by

Correct AnswerverifiedShow Answer

With the possible exception of statutory close corporations, all business corporations are required to elect a board of directors and to have a board of directors at all times.

Correct AnswerverifiedShow Answer

Directors may be removed by the officers of the corporation.

Correct AnswerverifiedFalse

A quorum is the minimum number of individuals who must be present or represented at a meeting as a prerequisite to the valid transaction of business.

Correct AnswerverifiedShow Answer

The agenda for a meeting of the shareholders of a corporation would not usually include

Correct AnswerverifiedShow Answer

A(n) _______ is an action brought by a share- holder on behalf of the shareholder and his or her entire class of shareholders against the cor- poration stemming from a cause of action belonging personally to the shareholder and the class the shareholder represents.

Correct AnswerverifiedShow Answer

The board of directors may not appoint a com- mittee to

Correct AnswerverifiedShow Answer

Corporate directors may be found personally liable for their poor business decisions that adversely affect the corporation, even if those decisions are made with diligence and in good faith.

Correct AnswerverifiedShow Answer

A ___________is the authority given by a share- holder to another to exercise the shareholder's voting rights.

Correct AnswerverifiedShow Answer

Corporate managers often enact corporate compliance programs to help prevent and de- tect criminal conduct within their corporations.

Correct AnswerverifiedShow Answer

The board of directors of a public corporation has oversight responsibility for the corpora- tion's business performance and plans.

Correct AnswerverifiedShow Answer

Misconduct by corporate executives can result in criminal prosecution of both the executives and the corporation.

Correct AnswerverifiedShow Answer

Reimbursement by a corporation to its officers and directors who are named as defendants in litigation involving the corporation for their expenses incurred in defending themselves is referred to as

Correct AnswerverifiedShow Answer

The method of voting that gives minority shareholders the right to cumulate their votes and increase their chances of electing a director is called

Correct AnswerverifiedC

In states following the Model Business Corporation Act, corporations must have a board of directors that consists of at least three directors.

Correct AnswerverifiedFalse

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C

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False