Question 1

Kelly transfers shares of stock that she owns in Lone Starz Company to Max.A shareholders' meeting takes place before Max's ownership is entered in Lone Starz's stock book.A vote at the meeting can be cast by

Accepted Answer

Max's ownership has not been entered in the stock book, so he is not yet a shareholder and cannot vote at the meeting. Only Kelly, the current shareholder, can cast a vote.

Question 2

Cole is a shareholder of Donut Holes,Inc.Cole will be deemed to have a fiduciary duty to Donut Holes and its minority shareholders if he has

Accepted Answer

A shareholder will have a fiduciary duty to a corporation and its minority shareholders if they have a sufficient number of shares to exercise de facto control. This means that they have the power to make decisions that will affect the corporation and its shareholders. The other options do not necessarily indicate a fiduciary duty. A restriction on transferability or a right of first refusal are common provisions in shareholder agreements, but do not necessarily create a fiduciary duty. Watered stock refers to shares that were issued at a price lower than their fair value and does not relate to the shareholder's fiduciary duty.

Question 3

Orin is a shareholder of Pinkwater Corporation.In some states,Orin might incur personal liability for unpaid Pinkwater debts if he

Accepted Answer

In some states, shareholders may incur personal liability if they purchase stock for less than its fair-market value, as this can be seen as not providing adequate consideration for the shares, potentially harming creditors.

Question 4

Ida,Jerzy,and Kit are the directors of Liberty Convenience Stores,Inc.Liberty has nine officers and forty-six shareholders.Dividends are ordered by the firm's

Accepted Answer

Dividends are ordered by the board of directors.

Question 5

Bea is a shareholder of Candy Confections Corporation.The right to inspect corporate books and records is

Accepted Answer

Shareholders have the right to inspect corporate books and records, but there may be some restrictions imposed by the corporation, such as requiring a written request and limiting the time and place of inspection. Therefore, Bea holds the right to inspect corporate books and records with some restrictions.

Question 6

Rusty and Sylvia are shareholders of Triad Hotel Corporation.Triad's directors fail to declare a dividend.Rusty and Sylvia could succeed in asking a court to order the directors to meet and declare a dividend

Accepted Answer

Under the legal principle of fiduciary duty, the directors have a responsibility to act in the best interest of the shareholders. This includes making informed decisions about the declaration of dividends. If the directors fail to declare a dividend despite Triad having sufficient profits or cash reserves, Rusty and Sylvia could argue that such a decision is an abuse of the directors' discretion and may seek legal recourse to compel the directors to declare a dividend.

Question 7

Mitch is a director and officer of Numero Uno,Inc.Mitch makes a marketing decision that results in a dramatic decrease in profits for Numero Uno and its shareholders.The shareholders accuse Mitch of breaching his fiduciary duty to the corporation.What is Mitch's best defense against this accusation Later,the Numero Uno board considers a resolution for the firm to compete with One-of-a-Kind Corporation.Mitch is a director and shareholder of One-of-a-Kind.What is Mitch's responsibility in this situation

Accepted Answer

The answer of Mitch is a director and officer of...

Question 8

Natalie is a shareholder of Off-Road Vehicle Company.As a shareholder,Natalie does not have

Accepted Answer

Shareholders generally do not have a right to compensation, as they are owners of the company and their returns come in the form of dividends or increases in the value of their shares.

Question 9

Guy is Hot Java Company's majority shareholder.Guy decides to sell his Hot Java stock.The sale will be an effective transfer of the control of the company.Does Guy owe a duty to Hot Java or its minority shareholders in this situation

Accepted Answer

The answer of Guy is Hot Java Company's majority shareholder.Guy...

Question 10

In all states,Sports Fitness Club Company and other corporations can pay dividends from

Accepted Answer

Dividends are paid out of retained earnings, which are the accumulated profits that a company chooses not to distribute as dividends in previous periods. Therefore, option C is the correct choice. Option A and D are incorrect because gross profits and surplus are not the same as retained earnings. Option B is not totally incorrect, as dividends could be paid out of net profits if there are no retained earnings available, but it is still not the best choice.

Quiz 35: Corporate Directors,officers, Shareholders