CORPORATIONS QS

Question 1

Corporation, which has not altered the statutory default rules regarding directors, has a five-member board of directors and a single class of outstanding stock. One director dies, and a second director resigns. At the next board of directors meeting, the remaining directors, by a vote of 2-1selects two individuals to replace the director who died and the director who resigned. Is this proper?

Answer 1

Yes, as the remaining directors approved the replacement directors by a majority vote.

Question 2

A judgment was issued against a corporation’s director for his violation of the duty of loyalty after the director willfully received an improper personal benefit. The corporation was awarded $125,000 in damages. In the articles of incorporation, the corporation has set a cap on director liability of $50,000. The director received $25,000 in cash compensation from the corporation during the 12-month period immediately preceding the violation of his duty of loyalty. How much of the damage award is the corporation entitled to recover from the director?

Answer 2

$125,000