Binding the Corporation and Board Actions

Question 1

Who acts for a corporation?

Answer 1

board of directors, which may in turn delegate day-to-day responsibilities to the corporation’s officers and employees

Question 2

What kind of authority are corporate officers likely to have?

1. apparent authority because they are also shareholders
2. actual express authority from being appointed to their office by the board of directors
3. actual express authority when anyone on the board of directors (including a single director on a board composed of multiple directors) gives them clear instructions
4. actual implied authority to do things not customarily done by officers
5. none of the above - corporate officers typically have no authority to act on behalf of the corporation

Answer 2

2. actual express authority from being appointed to their office by the board of directors

Question 3

According to Menard, Inc. v. Dage-MTI, Inc.: “inherent agency power” is:

Answer 3

the power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relationship and exists for the protection of persons harmed by or dealing with a servant or other agent

Question 4

The bylaws of Learning by Doing, Inc., incorporated in an MBCA jurisdiction, provide for a 16-person board of directors. Patrick, Learning by Doing’s CEO, has just negotiated a sale of a large and incredibly expensive piece of grading equipment. The sale agreement requires board authorization. Eight Learning by Doing directors are in town and available to meet. Two other Learning by Doing directors (who have just gotten married to each other) are in Key West on their honeymoon. The last six directors are in the high mountains of the Republic of Georgia conducting a teaching seminar in a remote village. Patrick emails all the directors giving notice of a special meeting in two days.

Would a unanimous vote by the eight available directors at a special meeting of the board be effective?

Answer 4

No, eight is not enough. A quorum constituting a majority of the board must be “present” at the meeting.

Question 5

The bylaws of Learning by Doing, Inc., incorporated in an MBCA jurisdiction, provide for a 16-person board of directors. Patrick, Learning by Doing’s CEO, has just negotiated a sale of a large and incredibly expensive piece of grading equipment. The sale agreement requires board authorization. Eight Learning by Doing directors are in town and available to meet. Two other Learning by Doing directors (who have just gotten married to each other) are in Key West on their honeymoon. The last six directors are in the high mountains of the Republic of Georgia conducting a teaching seminar in a remote village. Patrick emails all the directors giving notice of a special meeting in two days.

How can Patrick effectively include the two board members on their honeymoon in Key West?

Answer 5

by Skyping with them

Question 6

At a board of directors meeting:

1. each director gets one vote, except for inside directors who also hold officer or executive positions, who get two votes
2. action taken if the meeting was held without the required notice is invalid
3. directors provide two days’ notice to shareholders of upcoming financial statement releases
4. directors who only attend to complain about the manner in which the meeting was convened are considered present and waive the notice requirement
5. the board must re-form any committees in existence

Answer 6

2. action taken if the meeting was held without the required notice is invalid

Question 7

For _____________ board of directors meetings, two days’ notice is required; for ___________________________board of directors meetings, notice is not required.

Answer 7

special; regular

Question 8

Generally, the president or CEO of a corporation may have:

1. actual authority to bind the company by acts arising in the usual or regular course of business
2. apparent authority to bind the company by acts of an extraordinary nature
3. undisclosed authority to bind the company by acts with unidentified principals
4. apparent authority to bind the company by acts arising in the usual or regular course of business
5. 1 and 4 only

Answer 8

5. 1 and 4 only

Question 9

Fill in the blanks: _______________ vote to elect or remove directors; _____________________________operate as described in the bylaws; _________________________are responsible for managing the business and affairs of the corporation.

Answer 9

shareholders; officers; directors

Question 10

Articles of incorporation for a corporation must:

1. include the name of the corporation’s registered agent
2. specify the number of shares
3. specify the name and address of each incorporator
4. include the address of the corporation’s registered office
5. all of the above

Answer 10

5. all of the above