Worksheet 29.2: Directors and Officers

Outside directors

The director who do not hold management positions at the corporation

Quorum

The directors required to make a decision or take official action

Inside directors

The directors who do not hold management positions at the corporation

Corporate officers are hired by the directors.

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

The business judgment rule states that directors and officers:

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

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

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

Fiducuaries

Directors are hired by the shareholders through an interview process.

False

Directors and officers have a duty 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