BLaw 2 - Ch. 37 Quiz
If a shareholders' meeting is not held within either _____ months of the last annual meeting or _____ months after the end of the corporation's fiscal year, whichever is earlier, a shareholder may petition the court to order the meeting held.
15; 6
Which of the following is an INCORRECT statement regarding shareholder voting trusts?
A voting trust may not authorize the trustee to vote the shares held by the trust at his or her discretion. Correct: - A voting trust agreement must be in writing. - A voting trust agreement cannot exceed ten years. - A voting trust must be filed with the corporation and is open to inspection by shareholders of the corporation. - A voting trust is an arrangement whereby shareholders transfer their stock certificates to a trustee.
Which of the following is an INCORRECT statement regarding shareholders' meetings?
Annual shareholders' meetings must be held at the times fixed in the articles of organization. Correct: - Special shareholders' meetings may be held to consider important emergency issues such as merger or consolidation of the corporation with one or more other corporations. - Special shareholders' meetings may be called by the holders of at least 10 percent of the voting shares of the corporation. - Special shareholders' meetings may be called by the board of directors. - Any act that can be taken at a shareholders' meeting can be taken without a meeting if all the corporate shareholders sign a written consent approving the action.
_____ rights give existing shareholders the option of subscribing to new shares being issued in proportion to their current ownership interests.
Preemptive
Which of the following is an INCORRECT statement regarding shareholder voting agreements?
Shareholder voting agreements are limited in duration. Correct: - Two or more shareholders may enter into an agreement that stipulates how they will vote their shares for the election of directors or other matters that require a shareholder vote. - Shareholder voting agreements do not have to be filed with the corporation. - Shareholder voting agreements can be revocable. - Shareholder voting agreements can be irrevocable.
Which of the following is an INCORRECT statement regarding a corporation's shareholders?
Shareholders have comprehensive management duties. Correct: - A corporation's shareholders own the corporation. - Shareholders have the right to vote regarding fundamental changes in the corporation. - Shareholders have the right to vote in an election of corporate directors. - Shareholders are not agents of the corporation.
Which of the following is an INCORRECT statement regarding corporate voting requirements?
The affirmative vote of the majority of the non-voting shares represented at a shareholders' meeting constitutes an act of the shareholders for actions other than for the election of directors. Correct: - The corporation must prepare a shareholders' list that contains the names and addresses of the shareholders as of the record date and the class and number of shares owned by each shareholder. - Unless otherwise provided in the articles of incorporation, if a majority of shares entitled to vote are represented at a meeting in person or by proxy, there is a quorum to hold the meeting. - The shareholders' list must be available for inspection at the corporation's main office. - Once a quorum is present, the withdrawal of shares does not affect the quorum of the meeting.
Which of the following is an INCORRECT statement regarding the duty of care of directors and officers of a corporation?
The duty of care is not a fiduciary duty. Correct: - To meet the duty of care, directors and officer must discharge their duties in a manner they reasonably believe to be in the best interests of the corporation. - To meet the duty of care, directors and officer must discharge their duties with the care that an ordinary prudent person in a like position would use under similar circumstances. - To meet the duty of care, directors and officer must discharge their duties in good faith. - The duty of care requires corporate directors and officers to use care and diligence when acting on behalf of the corporation.
Which of the following is NOT an element that must be shown to prove usurping a corporate opportunity?
The opportunity is accompanied by demonstrated proof of profitability. Elements: - The corporation has the financial ability to take advantage of the opportunity. - The corporate officer or director took the corporate opportunity for himself or herself. - The opportunity was presented to the director or officer in his or her corporate capacity. - The opportunity is related to or connected with the corporation's current or proposed business.
Which of the following is an INCORRECT statement regarding corporate voting requirements?
The record date is set forth in the corporation's articles of organization. Correct: - The RMBCA permits corporations to grant more than one vote per share to some classes of stock and less than one vote per share to other classes of stock. - Only shareholders who own stock as of a set date may vote at a shareholders' meeting. - The record date may not be more than 70 days before the shareholders' meeting. - At least one class of shares of stock of a corporation must have voting rights.
Which of the following is NOT an example of a breach of a director's or officer's duty of care?
a director's or an officer's failure to realize a profit for the corporation in any given calendar or fiscal year. Correct Examples: - a director's or an officer's failure to attend board meetings on a regular basis - a director's or an officer's failure to make a reasonable investigation of a corporate matter - a director's or an officer's failure to properly supervise a subordinate who causes a loss to the corporation through embezzlement and such - a director's or an officer's failure to keep adequately informed about corporate affairs
According to the _____ rule, directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment.
business judgement
After conducting considerable research and investigation, the directors of a major automobile company decide to produce large and expensive sport-utility vehicles (SUVs). Three years later, when the SUVs are introduced to the public for sale, few of them are sold because of the public's interest in buying smaller, less expensive automobiles due to an economic recession and an increase in gasoline prices. In this case, the directors are protected by the _____ rule.
business judgement
The articles of incorporation of a corporation authorize the corporation to invest in real estate only. If a corporate officer invests corporate funds in the commodities markets, the officer is liable to the corporation for any losses suffered because of his or her _______.
duty of obedience
Shareholders of a corporation generally have _____ liability for the debts and obligations of the corporation.
limited
Directors and officers of a corporation owe a fiduciary duty to act honestly. This duty, called the duty of _____, requires directors and officers to subordinate their personal interest to those of the corporation and its shareholders.
loyalty
Cumulative voting gives a _____ shareholder a better opportunity to elect someone to the board of directors.
minority
The straight voting method is also referred to as _____ voting.
noncumulative
If an officer acts ______________ and enters into a contract with a third person, but the corporation _________________ of the contract, the corporation has ___________ the contract and is bound by it.
outside the scope of his or her employment, accepts the benefits, ratified
Unless otherwise required by a corporation's articles of incorporation or by corporate law, voting for the election of directors is by the _____ voting method.
straight
The articles of incorporation or the bylaws of a corporation can require a greater than majority of the shares to constitute a quorum of the vote of the shareholders. This is called a _____ voting requirement.
supramajority
Negligence usually involves a director's or officer's failure to do any of the following EXCEPT?
usurp a corporate opportunity. Correct: - Keep adequately informed about corporate affairs. - Properly supervise a subordinate who cause a loss to the corporation through embezzlement. - Attend board meetings on a regular basis. - Make a reasonable investigation of a corporate matter.
_____ voting is a system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates.
Cumulative
Which of the following actions does NOT require shareholders' approval?
Declaring a dividend. Does Require shareholders' approval: - amending the articles of incorporation - voluntary dissolution of the corporation - merging with another corporation - sale of substantially all of the corporation's assets outside the course of ordinary business.
The piercing the corporate veil doctrine is also called the _____ doctrine.
alter ego
According to the _____ doctrine, if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations.
piercing the corporate veil
A(n) _____ is a shareholders' authorizing of another person to vote the shareholder's shares at the shareholders' meetings in the event of the shareholder's absence.
proxy
A right of first _____ is an agreement that requires a selling shareholder to offer his or her shares for sale to the other parties to the agreement before selling them to anyone else.
refusal
The goals of the Sarbanes-Oxley Act (SOX) of 2002 include all EXCEPT which of the following?
replace independent corporate audits with internal audits
Jason is a corporate officer of Farmtown, a corporation that produces farming equipment. While still an officer, Jason decides to start a new tractor company that would directly compete with Farmtown. Is this allowed?
No, Jason owes Farmtown a duty of loyalty and is not allowed to compete with the corporation.