Question 1

Arthur is a shareholder of Rowson, Inc. 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:

Accepted Answer

A)   a direct suit.
B)   a derivative suit.
C)   a class action suit.
D)   an unauthorized suit.

Question 2

One difference between large, publicly held corporations and closely held corporations is that more of the shares of closely held corporations are held by institutional investors.

Accepted Answer

A) True 
 B)False

Question 3

The Revised Act requires that demand be made upon the board of directors to enforce the corporate right at issue as a prerequisite to bringing a derivative suit.

Accepted Answer

A) True 
 B)False

Question 4

How does the management structure of a closely held corporation differ from that of a publicly traded corporation?

Accepted Answer

A close corporation is one whose shares ...

Question 5

In most states, an officer can be removed for no reason if the board decides to do so.

Accepted Answer

A) True 
 B)False

Question 6

The remedy for a director's breach of fiduciary duty is:

Accepted Answer

A)   a suit in equity by the corporation.
B)   a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach.
C)   a class action suit by the shareholders.
D)   Not only  a suit in equity by the corporation but also  a derivative suit instituted by a shareholder to require the director to pay to the corporation the profits obtained through the breach.

Question 7

A voting trust permits a concentration of corporate control in one or more persons.

Accepted Answer

A) True 
 B)False

Question 8

Directors may vote by proxy when they are not able to be present for a meeting.

Accepted Answer

A) True 
 B)False

Question 9

Members of the board of directors may not determine their own compensation.

Accepted Answer

A) True 
 B)False

Question 10

Unlike voting trusts, shareholder voting agreements are not limited in duration.

Accepted Answer

A) True 
 B)False

Question 11

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Accepted Answer

A)   notifies the preparer of the information.
B)   reasonably believes that the information is reliable.
C)   conducts his own independent investigation.
D)   is given a sworn affidavit by the preparer.

Question 12

In the absence of a specific agreement, shares of stock are not freely transferable.

Accepted Answer

A) True 
 B)False

Question 13

The 2002 Sarbanes-Oxley Act forbids use of an audit committee by the board of a publicly held corporation; the full board must oversee the work of the public accounting firm employed to audit the corporate books.

Accepted Answer

A) True 
 B)False

Question 14

The issuance of favorably priced shares to management while excluding other shareholders normally will constitute a violation of the fiduciary duty.

Accepted Answer

A) True 
 B)False

Question 15

The percentage of shares required for a quorum may vary from state to state and from company to company.

Accepted Answer

A) True 
 B)False

Question 16

Under the MBCA, a quorum of shareholders at an annual meeting may be not less than what percentage of the shares entitled to vote?

Accepted Answer

A)   10
B)   33 1\3
C)   66
D)   50

Question 17

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation may operate without a board of directors.

Accepted Answer

A) True 
 B)False

Question 18

The board of directors of a corporation:

Accepted Answer

A)   determines the capital structure and financial policy of the corporation.
B)   receives no salaries for services, although directors may receive a fee for attending board meetings.
C)   has the power to bind the corporation when acting as a unit or individually.
D)   All of these are correct.

Question 19

Explain the reasons why the accountability of the management of a corporation is a cultural issue.

Accepted Answer

A relatively small number of large, publ...

Question 20

If Marilyn and George form a corporation under the Revised Act with Marilyn as president and George as treasurer, Marilyn cannot also be corporate secretary.

Accepted Answer

A) True 
 B)False

Exam 35: Management Structure of Corporations

The Revised Act requires that demand be made upon the board of directors to enforce the corporate right at issue as a prerequisite to bringing a derivative suit.

Correct Answer
verified

Members of the board of directors may not determine their own compensation.

Correct Answer
verified

The issuance of favorably priced shares to management while excluding other shareholders normally will constitute a violation of the fiduciary duty.

Correct Answer
verified

The 2002 Sarbanes-Oxley Act forbids use of an audit committee by the board of a publicly held corporation; the full board must oversee the work of the public accounting firm employed to audit the corporate books.

Correct Answer
verified

In most states, an officer can be removed for no reason if the board decides to do so.

Correct Answer
verified

How does the management structure of a closely held corporation differ from that of a publicly traded corporation?

Correct Answer
verified
A close corporation is one whose shares ...
View Answer

If Marilyn and George form a corporation under the Revised Act with Marilyn as president and George as treasurer, Marilyn cannot also be corporate secretary.

Correct Answer
verified

Correct Answer
verified

Under the MBCA, a quorum of shareholders at an annual meeting may be not less than what percentage of the shares entitled to vote?

Correct Answer
verified

The percentage of shares required for a quorum may vary from state to state and from company to company.

Correct Answer
verified

The remedy for a director's breach of fiduciary duty is:

Correct Answer
verified

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Correct Answer
verified

One difference between large, publicly held corporations and closely held corporations is that more of the shares of closely held corporations are held by institutional investors.

Correct Answer
verified

A voting trust permits a concentration of corporate control in one or more persons.

Correct Answer
verified

Explain the reasons why the accountability of the management of a corporation is a cultural issue.

Correct Answer
verified
A relatively small number of large, publ...
View Answer

Unlike voting trusts, shareholder voting agreements are not limited in duration.

Correct Answer
verified

The board of directors of a corporation:

Correct Answer
verified

In the absence of a specific agreement, shares of stock are not freely transferable.

Correct Answer
verified

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation may operate without a board of directors.

Correct Answer
verified

Directors may vote by proxy when they are not able to be present for a meeting.

Correct Answer
verified

Exam 35: Management Structure of Corporations

The Revised Act requires that demand be made upon the board of directors to enforce the corporate right at issue as a prerequisite to bringing a derivative suit.

Correct AnswerverifiedShow Answer

Members of the board of directors may not determine their own compensation.

Correct AnswerverifiedShow Answer

The issuance of favorably priced shares to management while excluding other shareholders normally will constitute a violation of the fiduciary duty.

Correct AnswerverifiedShow Answer

The 2002 Sarbanes-Oxley Act forbids use of an audit committee by the board of a publicly held corporation; the full board must oversee the work of the public accounting firm employed to audit the corporate books.

Correct AnswerverifiedShow Answer

In most states, an officer can be removed for no reason if the board decides to do so.

Correct AnswerverifiedShow Answer

How does the management structure of a closely held corporation differ from that of a publicly traded corporation?

Correct AnswerverifiedA close corporation is one whose shares ...View AnswerShow Answer

If Marilyn and George form a corporation under the Revised Act with Marilyn as president and George as treasurer, Marilyn cannot also be corporate secretary.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under the MBCA, a quorum of shareholders at an annual meeting may be not less than what percentage of the shares entitled to vote?

Correct AnswerverifiedShow Answer

The percentage of shares required for a quorum may vary from state to state and from company to company.

Correct AnswerverifiedShow Answer

The remedy for a director's breach of fiduciary duty is:

Correct AnswerverifiedShow Answer

A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:

Correct AnswerverifiedShow Answer

One difference between large, publicly held corporations and closely held corporations is that more of the shares of closely held corporations are held by institutional investors.

Correct AnswerverifiedShow Answer

A voting trust permits a concentration of corporate control in one or more persons.

Correct AnswerverifiedShow Answer

Explain the reasons why the accountability of the management of a corporation is a cultural issue.

Correct AnswerverifiedA relatively small number of large, publ...View AnswerShow Answer

Unlike voting trusts, shareholder voting agreements are not limited in duration.

Correct AnswerverifiedShow Answer

The board of directors of a corporation:

Correct AnswerverifiedShow Answer

In the absence of a specific agreement, shares of stock are not freely transferable.

Correct AnswerverifiedShow Answer

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation may operate without a board of directors.

Correct AnswerverifiedShow Answer

Directors may vote by proxy when they are not able to be present for a meeting.

Correct AnswerverifiedShow Answer

Correct Answer
verified

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A close corporation is one whose shares ...
View Answer

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verified

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Correct Answer
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Correct Answer
verified
A relatively small number of large, publ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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