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Exam 39: Corporations: Directors, Officers, and Shareholders

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Question 1

Multiple Choice

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Penelope is a shareholder in SMPB Corporation and is unable to attend the annual corporate board meeting. She authorizes Johnathan to be her ________ to vote on her behalf.

A) shareholder in wait
B) signatory
C) proxy
D) substitute
E) shareholder replacement

F) C) and E)
G) A) and B)

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Question 2

Multiple Choice

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If the corporate bylaws require a minimum of five directors to be present at each directors meeting, what happens if only two directors attend and they make a decision?

A) The decision is invalid because a quorum was lacking.
B) The decision is invalid because the directors did not have authority to vote
C) The decision is invalid unless shareholders vote to ratify
D) The decision is invalid because of a violation of the business judgment rule
E) The decision is valid

F) A) and B)
G) C) and D)

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Question 3

Multiple Choice

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[Self-Centered President] Allison is president of "We Manage You," a corporation set up to manage physician practices. Allison has never been very concerned with minority shareholders because she believes that they have little influence over the company since they cannot even elect a director. She is told, however, that her state just instituted the practice of cumulative voting. An election is coming up in which 10 directors will be elected. Minority shareholders own 2,000 shares, while majority shareholders own 8,000 shares. Allison tells her vice president, Marco, that she wants to ignore minority shareholders and focus her interests on majority shareholders and the directors. She also tells Marco that she wants to be particularly conscientious toward directors because the directors appoint officers, and she does not believe that she owes any actual duties to shareholders. She further orders Marco to destroy some documents subpoenaed in a criminal investigation against the company for illegal dumping. When Marco protests, Allison tells him not to worry because officers cannot be held responsible for criminal actions so long as the actions are done as part of the duties of an officer. She explains to him that only the corporation can be charged with liability in such cases. -How many votes will the minority shareholders have in the election?

[Self-Centered President] Allison is president of "We Manage You," a corporation set up to manage physician practices. Allison has never been very concerned with minority shareholders because she believes that they have little influence over the company since they cannot even elect a director. She is told, however, that her state just instituted the practice of cumulative voting. An election is coming up in which 10 directors will be elected. Minority shareholders own 2,000 shares, while majority shareholders own 8,000 shares. Allison tells her vice president, Marco, that she wants to ignore minority shareholders and focus her interests on majority shareholders and the directors. She also tells Marco that she wants to be particularly conscientious toward directors because the directors appoint officers, and she does not believe that she owes any actual duties to shareholders. She further orders Marco to destroy some documents subpoenaed in a criminal investigation against the company for illegal dumping. When Marco protests, Allison tells him not to worry because officers cannot be held responsible for criminal actions so long as the actions are done as part of the duties of an officer. She explains to him that only the corporation can be charged with liability in such cases. -Is Allison correct that officers cannot be held criminally responsible for actions they take on behalf of a corporation?

Though it varies from state to state, how long do most states allow a director to serve?

A director uses inside information to trade the corporation's stock for personal profit. Which of the following is true of the director's liability?

A director of a corporation knowingly releases a dangerous drug with the knowledge that 10 percent of those who take the drug will die. He illegally falsifies testing data to get the drug approved. Which of the following is true of his liability?

The requirement that a minimum number of directors be present at a meeting for decisions made at the meeting to be valid is which of the following?

The French Penal Code adopts what is called the ________ which requires that corporate criminal liability be applied only in cases that pertain to an "express mention in the law or in a French regulation."

Which of the following is false regarding officers of a corporation?

The three main groups of individuals within a corporation are directors, bondholders and customers.

There is no minimum number of directors who must be present at a directors meeting in order for decisions to be valid.

Which of the following are directors who are not officers or employees of the corporation?

Typically shareholders use a majority vote to elect directors.

The primary goal of shareholders is to raise the value of the company stock.

If stock is issued below its fair market value this is known as ________.

Which of the following may be redeemed for a certain number of shares at a specified price within a given time period?

Pagean is a director that is also an officer of Plenary Enterprise Corporation. Pagean's role can also be considered a(n) ________ director.

While a shareholder is not legally recognized as an owner of corporate property, shareholders have a(n) ________ in the company.

Who can call a special shareholder meeting?