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Exam 30: Management of a Corporation

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Question 1

Multiple Choice

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Guy is a director of Healthcare Corporation. Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes. He may be protected from liability for these mistakes by

A) business success insurance.
B) the business judgment rule.
C) the duty of loyalty.
D) duty of disclosure.

E) A) and D)
F) B) and C)

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Question 2

Multiple Choice

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When directors vote on issues affecting the corporation, ordinary matters generally require

A) a greater-than-majority vote.
B) a majority vote.
C) one vote.
D) a unanimous vote.

E) A) and B)
F) A) and D)

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Question 3

Multiple Choice

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Paul is a director on the board of Quality Tire Corporation. As a director, Paul may not

It is the responsibility of the s hareholde rs to hire or remove high level corporate officers.

Olivia is a director of Property Managers Inc. As a director, with respect to the corporation, Olivia is

A board of directors can hold special meetings so long as notice is sent to all directors, even if shareholders are not notified.

The initial board of directors of a corporation is normally appointed by the incorporators and serve until the first annual shareholders ' meeting.

Owen is a director of Packaging Company. As a director, Owen's rights include a right to

Directors and officers are not liable for the torts and crimes of employees under their supervision.

Directors do not need to be given advance notice of all regular board meetings.

Kay and Leo form Metro Delivery Inc. Responsibility for all policymaking decisions necessary to the management of corporate affairs rests with Metro's

Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate

Directors decide when dividends are to be paid to shareholders.

Biff is a director of ChemCo Inc. Because of this position, Biff becomes involved in litigation. With respect to the costs, fees, and damages involved, he has a right to

Sara and Tim form Urban Foods Inc. When it comes to managing Urban, the firm relies on

As a director of InstaTalk Inc., Jim has a right of inspection. This right

A director or officer must make a full disclosure of any conflict of interest with respect to a corporate contract.

Directors have a duty to be honest and to use prudent business judgment in the conduct of corporate affairs.

Daisy is a director of Extraction Corporation. She opposes an offer to merge Extraction with Fill Inc. because she would lose her board position. If the merger otherwise is a good deal for the company, Daisy is most likely liable for breach of

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