chapter 35

Question 1

Shareholders (S/H)

Answer 1

elect and remove the board of directors. They approve fundamental changes.

Question 2

The board of directors

Answer 2

chooses the CEO and sets his compensation.

Question 3

The CEO

Answer 3

hires the officers that run the day to day operations of the corporation.

Question 4

Quorum

Answer 4

The minimum number necessary to be present at a meeting to transact business.

Question 5

A proxy

Answer 5

is an authorization to vote another’s shares at a S/H meeting.

Question 6

Shareholder suits

Answer 6

Direct suit v. derivative suit

Question 7

Direct suit:

Answer 7

brought by a shareholder or a class of shareholders against the corporation based upon the ownership of shares.

Question 8

Derivative suit:

Answer 8

brought by a shareholder on behalf of the corporation to enforce a right belonging to the corporation.

Question 9

A direct lawsuit is brought to

Answer 9

enforce a claim that the shareholder has against the corporation based on her ownership of shares.

Question 10

Examples of direct suits i

Answer 10

include shareholders actions to compel payment of dividends properly declared, to enforce the right to inspect books, etc.

Question 11

If the plaintiff wins,

Answer 11

the recovery goes to the plaintiff

Question 12

Derivative suit

Answer 12

The theory is that there is a right for the corporation that is not being enforced by those running the corporation.
If the suit is won the recovery goes to the corporation.