Question 1

Which of the following is NOT a statutory safeguard when considering disclosure?

Accepted Answer

Pre-emptive rights are not related to statutory safeguards when considering disclosure. The other options listed are all examples of statutory safeguards that may be considered in the context of disclosure.

Question 2

Martin is a newly elected director of the Alliance Corporation.After being told of what would be expected of him,he is not sure he wants the position.However,upon investigating,he finds out that the only thing he will be liable for is

Accepted Answer

A

Question 3

Jacob is a minority shareholder in a closely held corporation.Recently he was dismissed from his marketing management position,and now the board of directors is stopping him from transferring his stock to a cousin.He has

Accepted Answer

Being locked in means that Jacob's shares are subject to restrictive agreements or limitations on transfer. Being frozen out means that Jacob is being excluded from the company's affairs and decisions. Jacob is experiencing both of these situations, as he is being prevented from transferring his shares and has been dismissed from his management position, indicating he is being excluded from the company. He may have legal claims against the board of directors for these actions. Therefore, option C is the best choice as it includes both being locked in and frozen out.

Question 4

Joseph is director of Marttel Inc.The company is thinking about buying some land in which Joseph is part owner.At the board of directors meeting where this is discussed and voted on,Joseph should

Accepted Answer

Joseph should abstain from voting on the matter, as his ownership in the land creates a potential conflict of interest. It would be unethical for him to take part in the decision-making process, as his personal gain could influence the outcome. By abstaining from the vote, he ensures that the decision is made solely on the basis of what is best for the company without any bias. This is the appropriate action to take in such situations to maintain the integrity of the decision-making process.

Question 5

The winding up (dissolution)of a corporation can be required by a court in order to rescue a

Accepted Answer

A court may order the winding up of a corporation to rescue a locked-in shareholder who cannot sell their shares and is unable to exit the corporation, often due to disputes or deadlock situations.

Question 6

Claude will be a minority shareholder in a new corporation.All interested parties are now in a meeting to draft the incorporating documents.To protect his rights as a minority shareholder,Claude wants certain provisions included in a well-drafted shareholder's agreement.Which of the following provisions is unnecessary and won't be included in such an agreement?

Accepted Answer

The answer of Claude will be a minority shareholder in...

Question 7

What are pre-emptive rights?

Accepted Answer

Pre-emptive rights are a shareholder's rights to maintain their proportionate ownership in a company by being given the right to purchase newly issued shares before they are offered to the public. This option allows shareholders to avoid dilution of their ownership and maintain their voting power. Therefore, pre-emptive rights refer to the rights to retain one's proportionate holdings in a firm.

Question 8

In a distributing public company,auditors are appointed by

Accepted Answer

Auditors in a distributing public company are appointed by the shareholders at the annual general meeting. This is to ensure their independence and to hold management accountable to the owners of the company. Directors, the Securities Commission, the audit committee of the board of directors, and the treasurer do not have the authority to appoint auditors.

Question 9

Directors owe duties to

Accepted Answer

Directors owe duties to the public, creditors of the corporation, the shareholders, and the corporation itself.

Question 10

John,the controlling shareholder of a large national company,elected Allan,Edward,and Mary as its directors.John has just heard of a venture that may or may not be beneficial to the company,but using his power as controlling shareholder,wants to go ahead with it and tells the three directors to approve it,which they do.It then turns out that the venture does more harm than good to the company.In this case

Accepted Answer

John, as the controlling shareholder, owes fiduciary duties to the corporation. These duties include the duty of care, the duty of loyalty, and the duty to account. In this case, John breached his duty of care by failing to exercise reasonable care in making the decision to approve the venture. He also breached his duty of loyalty by putting his own interests ahead of the interests of the corporation. Finally, he breached his duty to account by failing to disclose his conflict of interest to the other directors.

Question 11

The only "document of record" the company need NOT allow access to by the shareholders is

Accepted Answer

Minute books of board of directors' meetings may contain confidential and sensitive information that the company may not be comfortable sharing with shareholders. Shareholders are entitled to access other documents such as company charter, register of directors, register of all transfers of shares, and special resolutions.

Question 12

Which of the following is NOT a duty of the directors of corporations?

Accepted Answer

It is not the duty of the directors to take care of the day-to-day business of the corporation. This responsibility is typically delegated to the management team of the corporation. The directors instead focus on setting the strategic direction of the corporation, making major decisions, and ensuring that the management team is following the corporation's objectives and values. The other options listed are all typical duties of the directors of corporations.

Question 13

A director will be criminally liable where she or he

Accepted Answer

The answer of A director will be criminally liable where...

Question 14

Regarding financial rights,shareholders have a right to

Accepted Answer

Shareholders have the right to receive dividends when declared by the corporation. Dividends are not guaranteed and are only paid out when the corporation has profits and decides to distribute them to shareholders. Shareholders do not have a right to any discrimination in the payment of dividends or to dividends paid in specific order of preferences assigned to different classes of shareholders. Capital appreciation is a possible benefit of owning shares, but it is not a guaranteed right.

Question 15

To ensure the accuracy of financial statements,business corporation legislation provides for the appointment of an independent ________ by the shareholders.

Accepted Answer

Business corporation legislation requires the appointment of an independent auditor by shareholders to ensure the accuracy of financial statements. Auditors are responsible for reviewing a company's financial records and providing an unbiased opinion on whether the financial statements are presented fairly in all material respects. This helps to ensure the integrity and reliability of the financial statements for all stakeholders.

Question 16

The CEO of a corporation is

Accepted Answer

The CEO is appointed or hired by the board of directors. The board of directors is responsible for selecting and hiring the CEO as their top executive.

Question 17

Sometimes almost all the directors of a company have interests in a contract.They should

Accepted Answer

When almost all the directors of a company have interests in a contract, it would be a conflict of interest situation. In such cases, the contract should be presented to a general meeting of shareholders for their ratification after full disclosure has been made. This allows for transparency and ensures that the decision is made in the best interest of the company as a whole.

Question 18

Charles,a minority shareholder in a large private provincial company,has just learned that the controlling shareholder together with the directors of the company intend to sell a large portion of the property owned by the corporation at a price less than its fair market value.If Charles wants to stop this,he will

Accepted Answer

The answer of Charles,a minority shareholder in a large private...

Question 19

Which of the following best describes the appraisal remedy?

Accepted Answer

The appraisal remedy is the right of a dissenting shareholder to have his or her shares bought out by the corporation at a fair price, when the shareholder disagrees with certain corporate actions, such as mergers or acquisitions.

Question 20

A proceeding brought by one or more shareholders in the name of the corporation in respect of a wrong done to the corporation is referred to as

Accepted Answer

A derivative action is brought by a shareholder on behalf of the corporation when the corporation itself does not bring a claim for a wrong that has been done to it. This type of action is different from an oppression action or a winding-up action, which are brought by shareholders to protect their own rights and interests, rather than those of the corporation. An appraisal action is a proceeding initiated by shareholders who disagree with the price offered for their shares in a corporate merger or acquisition. A negligence action is a civil lawsuit filed by a plaintiff against a defendant alleging that the defendant's reckless or careless behavior caused the plaintiff harm.

Quiz 26: Corporate Governance: the Internal Affairs of Corporations