Worksheet 34.1: Directors and Officers & Duties and Liabilities of Directors and Officers

T/F: Corporate officers are hired by the directors.

True

The three main rights that directors have in order to properly function.

Right to participationRight of inspectionRight to indemnification

The two most common committees formed by large boards of publicly traded companies

Audit Committee Executive Committee

The business judgment rule states that directors and officers:

are immune from liability for bad business judgments so long as they exercised reasonable care.

the directors who do not hold management positions at the corporation

outside directors

the directors required to make a decision or take official action

quorum

T/F: Directors are hired by the shareholders through an interview process.

False

With respect to officers, most corporations have a_____, one or more Vice Presidents, a secretary, and a_____.

President Treasurer

T/F: Directors and officers may be liable for the actions of corporate employees under their supervision as well as for their own torts and crimes.

True

When a corporation enters into a contract or engages in business with another corporation in which one of the board members has a personal interest, that board member must fully_____the conflict and_____voting.

disclose abstain from

Individual corporate directors ________ have the ability, as agents of the corporation, to bind the corporation.

do not

Officers and directors have a special relationship with the corporation and its shareholders and are called:

fiduciaries

Directors and officers have a duty of care to act______, to exercise the care that a(n)________person would exercise in similar circumstances, and to do what the director or officer believes is in the_______of the corporation.

in good faith ordinarily prudent best interest

the directors who also are officers of the corporation

inside directors