BLAW Final Ch. 22

In 1975, the top 100 CEOs earned roughly 40 times as much as the average worker. Today's top CEOs earn approximately ________ times as much as the average worker.

400

Which of the following is NOT one of the circumstances in which courts will hold shareholders personally liable for the debts of the corporation?

Accounting discrepancies

George owns 100 shares of cumulative preferred stock in Seaside Transport, Inc. Jackie owns 50 non-cumulative preferred shares, and Orwell owns 120 shares of common stock. Seaside does not pay dividends in 2007. In 2009:

All of these answers (George and Jackie must receive their 2009 dividends before Orwell is paid any 2009 dividends & Orwell cannot receive any 2009 dividends until George is paid for the 2007 dividends & Jackie cannot receive the dividends Seaside could not afford to pay in 2007. She will just lose them)

In conjunction with an annual shareholder meeting, a corporation must provide shareholders with:

All of these answers (an annual report, a proxy, a proxy statement)

Defining a corporation with such information as the corporate name, the number and type of authorized shares of stock, identification of the purpose and the agent, is done through the:

All of these answers. All of these terms are used to identify the same document (charter, articles of incorporation, certificate of organization)

A director violates the corporate opportunity doctrine if he or she competes with the corporation, unless the disinterested directors ________ the director's actions.

Approve of

Demi is an officer of a corporation. She made a difficult business decision. When challenged about her decision, the court ruled she had acted in good faith and that the business judgment rule applied. As such:

Demi will not be held personally liable for a decision that results in money losses to the company

Which of the following groups has the authority to manage a corporate business?

Directors

Who has the authority to manage the corporate business?

Directors

A manager who has engaged in self-dealing has violated the ________ to the corporation.

Duty of loyalty

Which of the following is the most appropriate term to use when describing management's duty to its shareholders?

Fiduciary duty

SuperCo. is incorporated under Delaware law. It is registered to do business in New York. Legally, in New York SuperCo. is known as what kind of corporation?

Foreign

Which of the following describes the duty of loyalty?

It prohibits making a decision that benefits the decision-maker at the expense of the corporation

A board of directors is considering whether to invest a great deal of money into research and development. Such a decision could have a long-term beneficial effect for the company's future. As an alternative, the board could forego the expenditure into research and development and buy back its own shares in order to immediately increase the company's reserves. Which of the below groups would most likely favor the option to increase the company's reserves and not invest in more research and development?

Shareholders

Which piece of legislation gives shareholders acting in good faith the right to inspect and copy the corporation's records?

The Model Act

Katrina decided to incorporate her business under the name TriHeart Inc. Before TriHeart was incorporated, Katrina signed a contract in the name of TriHeart, Inc. to have some office space remodeled. Which statement is correct?

TriHeart will be liable on the contract only if the corporation adopts the contract

SuperCo. is incorporated in the state of Delaware and is registered only in Delaware. Dolly purchased a SuperCo. product from a company's sales representative following a presentation in Michigan. Dolly was seriously injured by the product in Michigan. Under the Model Act, if Dolly sues in Michigan, can SuperCo. defend the suit there?

Yes, SuperCo. can defend against a lawsuit in Michigan regardless of whether SuperCo. is registered to do business in that state

A corporate charter is filed with:

a state's Secretary of State office

Lisha is incorporating her business. The business's home state is Wisconsin. Business will be conducted in California, Michigan, Pennsylvania, and Virginia. Lisha:

can incorporate the business in any state

Tagami is incorporating her business. The business's home state is Washington. Business will be conducted in California, Oregon, and Idaho, too. Tagami:

can incorporate the business in any state

The officers of a corporation are:

chosen by the board of directors

Management's duty to have a rational business purpose, avoid illegal behavior, and make informed decisions refers to its:

duty of care

Arthur is a director of Arcamax. Arthur wants to personally make a major purchase from Sho Co. If it knew of the opportunity, Arcamax might be also interested in making that same purchase. Arthur must:

first offer the opportunity to make the purchase to the disinterested directors of Arcamax or its shareholders

In Delaware, a person may reserve a corporate name:

for 120 days by paying a $75 fee

If a court determines a manager's corporate decision amounted to self-dealing:

the business judgment rule will not apply

Lani is on the board of directors of Net Plus. Net Plus is looking for a warehouse to purchase. Lani owns a warehouse. In order for Lani to sell her warehouse to Net Plus:

the disinterested members of the board of directors may approve the transaction

MegaCorp purchased 40,000 shares of its own stock that had previously been owned by private investors. The stock MegaCorp repurchased is called:

treasury stock

SuperCo. purchased 20,000 shares of its own stock that had previously been owned by private investors. The stock SuperCo. repurchased is called:

treasury stock