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Exam 34: Corporate Directors, Officers, and Shareholders

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Question 31

Multiple Choice

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To avoid potential liability for misconduct in corporate operations, directors can refrain from reasonable supervision of work delegated to

A) corporate officers.
B) corporate employees.
C) board committees.
D) none of the choices.

E) B) and D)
F) All of the above

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Question 32

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Corporate officers do not act as agents of the corporation.

A) True
B) False

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Question 33

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If a board attempts to manipulate the shareholders' election of a director to reduce the shareholders' influence, they can challenge the election in court.

Directors have a right to be notified of all board meetings.

A corporate officer is liable to the corporation or its shareholders for a bad business decision.

If a shareholder's derivative suit is successful, any damages recovered normally go into the corporation's treasury.

A director who becomes involved in litigation because of his or her position has no right to be indemnified for the costs.

Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes

AstroStar, Inc.'s board of directors consists of three members-Eckhart, Dolan, and Macero. At a regular board meeting, the board selects Galiard as president of the corporation. Later, an audit reveals that during his term as president he has openly embezzled $500,000 from AstroStar. The same audit reveals that the board knew when it selected Galiard that he had been previously convicted of embezzlement. Can the corporation hold directors Eckhart, Dolan, and Macero personally liable?

With respect to a corporation, a director is

The primary function of a corporation's officers is to authorize major corporate policy decisions.

Corporate officers have responsibility for all policymaking decisions necessary to the management of corporate affairs.

Directors are not answerable to the corporation for breaching their duty of care.

With respect to a corporation, an officer's rights are defined by

Molly is a director and Ned is an officer of Online Education Inc. Liability for the torts of employees under their supervision may extend to

Han is a shareholder of Insulation Inc. When the directors fail to undertake an action to redress a wrong suffered by the firm, Han files a suit on its behalf. Any damages recovered by the suit will go to the firm's

Dhani, Ezra, and Finn are the first directors on the board of Global Trading Corporation. Subsequent directors will be elected by a majority vote of Global's

How many directors serve on a corporation's board can be set forth in the corporation's bylaws.

Under the business judgment rule, directors cannot be held liable for the negligence or mismanagement of corporate personnel.

Because of their positions within the corporation, directors must make full disclosure of any conflicts of interest with respect to corporate contracts.