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| 1 | |
Cumulative voting may allow certain groups of minority shareholders (who normally would not be able to elect anyone to the board of directors) to achieve some representation on the board of directors. |
| | A) | True |
| | B) | False |
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| 2 | |
In order for a shareholders' meeting to conduct business, there must be a quorum present of all outstanding shares. |
| | A) | True |
| | B) | False |
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| 3 | |
Controlling shareholders of a corporation may have a fiduciary duty to the corporation and to the other shareholders. |
| | A) | True |
| | B) | False |
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| 4 | |
If a corporation is profitable in any given quarter, the board of directors must declare and issue a dividend to its shareholders. |
| | A) | True |
| | B) | False |
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| 5 | |
The corporation's board of directors may elect to distribute additional shares of the corporation in the form of a dividend rather than distribute cash. |
| | A) | True |
| | B) | False |
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| 6 | |
A shareholder derivative suit may be brought by one or more shareholders of the corporation when the board of directors fails to act to protect the corporation's interest. |
| | A) | True |
| | B) | False |
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| 7 | |
Alan owns 20% of ABC Corporation. ABC is a close corporation with only ten shareholders. All of the shares have transfer restrictions that do not permit shareholders to sell to people who are not current shareholders. The majority of the shareholders voted to change the purpose clause in the articles of incorporation, completely changing the nature of ABC. Alan disagrees with the majority's vote. What may Alan do? |
| | A) | Alan may require the corporation to pay him the fair value of his shares. |
| | B) | Since Alan disagrees with the majority's decision, and since that decision materially changes the stated purpose of the corporation, Alan may sell his shares to anyone, including people who are not current shareholders. |
| | C) | Alan may block the others from changing the purpose clause, since he owns more than 10% of the corporation. |
| | D) | Both A and B |
| | E) | All of the above |
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| 8 | |
Shareholders may be liable to the corporation: |
| | A) | if they knowingly receive dividends or other monies from the corporation illegally. |
| | B) | if they buy and sell shares on the open market and realize more than a ten-percent gain in less than six months. |
| | C) | if they breach their fiduciary duty to the board of directors. |
| | D) | if they vote in a manner inconsistent with the will of the board of directors at an annual shareholder meeting. |
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| 9 | |
The board of directors may only elect to issue a dividend: |
| | A) | if the issuance of the dividend does not make the corporation insolvent. |
| | B) | if after issuance of the dividend, the corporation still has sufficient assets to cover its liabilities and the liquidation preference of its preferred shareholders. |
| | C) | if the shareholders elect to have a dividend declared. |
| | D) | Both A and B |
| | E) | All of the above |
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| 10 | |
Shareholders have a right to inspect the books and records of a corporation: |
| | A) | anytime, if they are seeking accounting records, board and committee minutes, or shareholder meeting minutes more than three years old. |
| | B) | anytime, if they are seeking a listing of shareholders entitled to notice of a meeting, the articles of incorporation, the bylaws, or the shareholder meeting minutes within the last three years. |
| | C) | anytime, without any limitation. |
| | D) | Both A and B |
| | E) | All of the above |
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