Board of Directors

Question 1

Authority of the Board of Directors

Answer 1

No Individual Authority

Act as a Group (Quorum)

Question 2

Primary Responsibilities of Board

Answer 2

Safeguard Assets

Maximize Shareholder Return

Question 3

Specific Duties of the board

Answer 3

Elect, Remove and Supervise Officers
Declare Dividends
Adopt/Amend/Repeal Bylaws (policies and procedures)
Setting Management Compensation
Manage potential conflicts of interest between shareholders (Principles) and Senior Management (agent)

Question 4

Board has the following duties to the company

Answer 4

Fiduciary Duties

Duty of Loyalty

Question 5

Examples of Duty of Loyalty

Answer 5

Can not serve on different boards with competing interests (Coke vs Pepsi)

Question 6

Directors can transact business transactions with the corporation as long as

Answer 6

1) It is disclosed

2) approved by majority of the non-conflicted board

Question 7

Corporate Opportunity Doctrine

Answer 7

Director can not take business opportunity for himself unless corporation rejects it.

Question 8

Indemnification

Answer 8

Board of Directors (and Officers) can be indemnified (reimbursed) if

Acted in Good Faith

and with the Best interests of the company

Question 9

Board of Directors and Officers can be held liable for Bad Faith if

Answer 9

Intentional Harm

Intentional Violation

Unlawful Distribution

Breach Duty of Loyalty

Question 10

Board of directors can consist of

Answer 10

Officers - as long as a majority of the board is independent

Question 11

Directors are

Answer 11

NOT Agents