Question 1

The traditional corporate objective is to make money for the shareholders.

Accepted Answer

The traditional objective of the business corporation has been to enhance corporate profits and shareholder gain.

Question 2

Generally,under the doctrine of respondeat superior,a corporation is liable for an employee's tort that is reasonably connected to the authorized conduct of the employee.

Accepted Answer

Generally,under the doctrine of respondeat superior,a corporation is liable for an employee's tort that is reasonably connected to the authorized conduct of the employee.

Question 3

Under the MBCA,only directors of a corporation are entitled to mandatory indemnification rights.

Accepted Answer

Under the MBCA,officers and employees who are not directors are entitled to the same mandatory indemnification rights as directors.

Question 4

Delta Corporation's board of directors is considering a resolution that may cause severe liability to the directors.Wayne,a board member,disagrees with the decision.Unless he clearly registers his dissent,he may be liable.

Accepted Answer

A director who assents (by attending a board meeting and not registering his dissent)to an action of the board of directors may be held liable for the board's exceeding its authority or its failing to meet its duty of due care or loyalty.

Question 5

The most common committee created from board of directors is an executive committee,which typically is given the power to act for the board on most matters when the board is not in session.

Accepted Answer

The most common board committee is the executive committee,which is usually given the authority to act for the board on most matters when the board is not in session.

Question 6

The Model Business Corporation Act has made the inclusion of purpose clause in the articles of incorporation compulsory.

Accepted Answer

Under the Model Business Corporation Act (MBCA),the inclusion of a purpose clause in the articles of incorporation is optional.

Question 7

Alvin and Billy own 70 percent of Beta Corporation.Claude owns 30 percent of Beta Corporation.Alvin and Billy consistently vote and act in ways that only benefit them and harm Claude.Claude may claim oppression as a minority shareholder.

Accepted Answer

When a group of shareholders has been isolated for beneficial treatment to the detriment of another isolated group of shareholders,the disadvantaged group may complain of oppression.

Question 8

Corporate constituency statutes direct the board of directors to act in the best interests of the corporation,not just the interests of the shareholders,and to maximize corporate profits over the long term.

Accepted Answer

Most states have enacted corporate constituency statutes,which broaden the legal objectives of corporations.Such statutes permit or require directors to take into account the interests of constituencies other than shareholders,including employees,suppliers,and customers.These statutes direct the board to act in the best interests of the corporation,not just the interests of the shareholders,and to maximize corporate profits over the long term.

Question 9

The term "raiders" refers to outsiders who attempt to gain control of a corporation.

Accepted Answer

Outsiders who attempt to acquire control of publicly held corporations are called raiders.

Question 10

A director has the right to inspect corporate books and records that contain corporate information essential to the director's performance of her duties.

Accepted Answer

A director has the right to inspect corporate books and records that contain corporate information essential to the director's performance of her duties.

Question 11

The two easiest ways to freeze out minority shareholders are the freeze-out acquisition and the share split.

Accepted Answer

The two easiest ways to freeze out minority shareholders are the freeze-out merger and the reverse share split.

Question 12

The total fairness test permits a shareholder to require the corporation to purchase his shares at a fair price.

Accepted Answer

A right of appraisal permits a shareholder to require the corporation to purchase his shares at a fair price.

Question 13

Straight voting permits a single holder of more than 30 percent of the shares of a corporation to dominate the management of the corporation.

Accepted Answer

Straight voting permits a holder of more than 50 percent of the shares of a corporation to dominate the corporation by electing a board of directors that will manage the corporation as he wants it to be managed.

Question 14

The primary source of power for a corporation is the GATT (General Agreement on Trade and Tariffs).

Accepted Answer

The primary source of a corporation's powers is the corporation statute of the state in which it is incorporated.

Question 15

Directors and officers are liable to the corporation for losses resulting from their lack of care.

Accepted Answer

Directors and Officers are liable for losses to the corporation resulting from their lack of care or diligence.

Question 16

Officers of a corporation are also agents of the corporation.

Accepted Answer

The officers of the corporation also serve as agents of the corporation.

Question 17

Directors must be shareholders of the corporation on whose board they serve.

Accepted Answer

Generally,any individual may serve as a director of a corporation.A director need not even be a shareholder.

Question 18

Unless the articles of incorporation provide otherwise,directors cannot be removed with or without cause.

Accepted Answer

Modern corporation statutes permit shareholders to remove directors with or without cause.However,most corporations have provisions in their articles authorizing the shareholders to remove directors only for cause.

Question 19

The traditional view was that a corporation is not liable for a crime because criminal guilt requires the presence of intent.

Accepted Answer

The traditional view was that a corporation could not be guilty of a crime because criminal guilt required intent.

Question 20

When an officer or director of a corporation exceeds his powers,he may be liable to the corporation if it is damaged by the act exceeding that person's authority.

Accepted Answer

An officer or a director will be liable to the corporation if the business is damaged by an act exceeding the person's authority.

Quiz 43: Management of Corporations

The traditional corporate objective is to make money for the shareholders.

Generally,under the doctrine of respondeat superior,a corporation is liable for an employee's tort that is reasonably connected to the authorized conduct of the employee.

Under the MBCA,only directors of a corporation are entitled to mandatory indemnification rights.

Delta Corporation's board of directors is considering a resolution that may cause severe liability to the directors.Wayne,a board member,disagrees with the decision.Unless he clearly registers his dissent,he may be liable.

The most common committee created from board of directors is an executive committee,which typically is given the power to act for the board on most matters when the board is not in session.

The Model Business Corporation Act has made the inclusion of purpose clause in the articles of incorporation compulsory.

Alvin and Billy own 70 percent of Beta Corporation.Claude owns 30 percent of Beta Corporation.Alvin and Billy consistently vote and act in ways that only benefit them and harm Claude.Claude may claim oppression as a minority shareholder.

Corporate constituency statutes direct the board of directors to act in the best interests of the corporation,not just the interests of the shareholders,and to maximize corporate profits over the long term.

The term "raiders" refers to outsiders who attempt to gain control of a corporation.

A director has the right to inspect corporate books and records that contain corporate information essential to the director's performance of her duties.

The two easiest ways to freeze out minority shareholders are the freeze-out acquisition and the share split.

The total fairness test permits a shareholder to require the corporation to purchase his shares at a fair price.

Straight voting permits a single holder of more than 30 percent of the shares of a corporation to dominate the management of the corporation.

The primary source of power for a corporation is the GATT (General Agreement on Trade and Tariffs).

Directors and officers are liable to the corporation for losses resulting from their lack of care.

Officers of a corporation are also agents of the corporation.

Directors must be shareholders of the corporation on whose board they serve.

Unless the articles of incorporation provide otherwise,directors cannot be removed with or without cause.

The traditional view was that a corporation is not liable for a crime because criminal guilt requires the presence of intent.

When an officer or director of a corporation exceeds his powers,he may be liable to the corporation if it is damaged by the act exceeding that person's authority.