Chapter 5 Questions

Question 1

Individual corporate directors have the ability, as agents of a corporation, to bind the corporation:

Answer 1

Not at all, as individuals directors do not have agency power

Question 2

Outside Director

Answer 2

A person on the board of directord who does not hold a managment posiiton at the corporation

Question 3

Inside Director

Answer 3

A person on the Board of Directos who is also an office of the corporation

Question 4

Quorom

Answer 4

The number of memeber of a decision making body thta must be present before business may be transacted

Question 5

3 most important rights of director’s

Answer 5

1. ) Right to participation
2. ) Right of inspection
3. ) Right of indemnifiaction

Question 6

Corporate officers and other executive employees are hired by the board of directors.

Answer 6

True

Question 7

A quorom consists of:

Answer 7

51% of all shareholders

Question 8

A board of directors does NOT have responsibility over:

Answer 8

The election and removal of members of the board

Question 9

the Duty of Care of Directors and Officers Requires that a Director or Officer:

Answer 9

1. Act in Good faith (honestly)
2. Excercise the care that an ordinarily prudent person would excercise in similiar circumstances
3. Do what he or she believes is in the best interests of the corportaion

Question 10

The business judgment rule states that:

Answer 10

directors and officers are immune from liability for exercising poor business judgment in certain circumstances.

Question 11

Genève is a member of the board of directors and the chief financial officer of the corporation. Under the duty of care that she owes that corporation, she does NOT need to:

Answer 11

oversee every aspect of the business, including such things as ordering merchandise and arranging for janitorial services

Question 12

Any corporate director who sits on more than one board is engaging in illegal activity.

Answer 12

False

Question 13

A major power held by shareholders is the power to

Answer 13

Vote to ammend the by laws or the articles of incorporation

Question 14

Proxy

Answer 14

A written agreement betweeen a stockholder & another under which the stockholder authorizes the other to vote the stockholder’s shares in a certain manner

Question 15

Voting trust

Answer 15

An agreement under which legal title to shares of corporate stock is transferred to a trustee who is auhtorized by the shareholder to vote the shares on thier behalf

Question 16

The reason most states either permit or require the use of cumulative voting when electing directors is to:

Answer 16

allow minority shareholders a greater chance at represnetation on the board

Question 17

A corporation must notify its shareholders of the date, time, and place of an annual meeting at least ? days before the meeting date.

Answer 17

10

Question 18

When a quorum of shareholders is not present at an annual meeting, voting can proceed if the majority of those present agrees.

Answer 18

False

Question 19

Ordinarily, who is entitled to vote at an annual corporate meeting?

Answer 19

Only persons who names appear on the corporation shareholder’s record as owners

Question 20

Dividend

Answer 20

jd

Question 21

Stock Warrants

Answer 21

k

Question 22

Stock Certificates

Answer 22

k

Question 23

Premptive Rights

Answer 23

k

Question 24

3 sources from which dividends may be paid

Answer 24

1. R/E
2. Net Profits
3. Surplus

Question 25

When a shareholder’s derivative suit is successful, any damages recovered normally:

Answer 25

Into the corporation’s treasury