Exam Review Quiz #1

Question 1

Under the RMBCA what is necessary for a corp. to achieve a successful voluntary dissolution

Answer 1

A recommendation of dissolution by the board of directors and approval by a majority of all shareholders entitles to vote.

Question 2

Under the RMBCA what must be included in a corps. articles of incorporation (Charter)

Answer 2

1. the corporations name
2. the number of authorized shares
3. the street address of the initial registered office
4. the name of the registered agent at the office
5. name and address of each incorporator

Question 3

Under the RMBCA the following actions by a corp. would entitle a shareholder to dissent from the action and obtain payment of the fair value of his or her share

Answer 3

1. an amendment to the articles of incorporation that materially and adversely affects rights in respect of a dissenter’s shares because it alters or abolishes a preferential right of the shares
2. Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitles to vote on the plan

Question 4

The corporate document that sets forth the scope of authority under which transactions are governed

Answer 4

Bylaws: contain any provision for managing the business and regulating the entity’s affairs that does not conflict with the law or the articles of incorporation.

Question 5

Who owes fiduciary duty to the corporation

Answer 5

A mas best majority shareholder to fellow shareholders. Also directors an officers owe a fiduciary duty to the corp.

1. act in its best interest
2. be loyal
3. use due diligence in carrying out their responsibilities
4. to disclose conflicts of interest

Question 6

Absent a specific provision in its articles of incorporation, a corporations board of directors has the power to

Answer 6

1. selecting of officers
2. determining capital structure
3. Proposing fundamental changes
4. declaring dividends
5. Setting management compensation

Question 7

Who can amend the articles of incorporation

Answer 7

this power is reserved for the shareholders

Question 8

A corporation formed by a political unit to achieve a governmental purpose is described as

Answer 8

a public corporation is formed and funded by a local, state, or federal political unit to achieve a governmental purpose

Question 9

Shareholder approval is needed for

Answer 9

Removal of directors

Question 10

Under RMBCA what must be contained in a corporations articles of incorporation

Answer 10

The number of shares the corporation id authorized to issue

Question 11

Who approves fundamental changes in corporate structure

Answer 11

Shareholders: who elect the boar of directors and approve fundamental changes in the corporate structure

Question 12

Who establishes corporate policies and elect or appoint corporate officers who carry out the policies in the day-to-day management of organization

Answer 12

Directors

Question 13

A corporation may not ratify

Answer 13

a pre-incorporation, because no principal existed at the time of contracting. however, adoption by the corporation is a legal substitute for ratification

Question 14

The RMBCA establishes a conclusive presumption that

Answer 14

when the articles have been filed, the corporation exists even if the filing was defective

Question 15

After filing the articles of incorporation

Answer 15

the incorporators elect the members of the initial board of directors if not named in the articles and also adopt bylaws. After the incorporators resign

Question 16

A court might disregard a corporate entity if it

Answer 16

1. finds the corp. is merely the alter ego of a shareholder
2. two or more entities are related corporations and in practice do not maintain sufficiently independent existence
3. a corp. is inadequately capitalized to carry on its intended business

Question 17

A shareholder is an owner but has no direct rights

Answer 17

A shareholder is an owner but has no direct rights. The shareholders primary participation is by meeting annually and electing directors by a plurality of the votes cast by the shares entitled to vote at a meeting at which a quorum is present

Question 18

A dissident shareholder has notified the directors that he intends to sue for negligence

Answer 18

Under federal law, a dissident shareholder may require the corp. to provide a list of the shareholders and mail proxy materials to those shareholders if the dissident shareholder pays the cost of the mailing

Question 19

Davis, a director of Active Corp. is entitled to

Answer 19

Rely on information provided by a corporate officer

Question 20

Officers of a corporation

Answer 20

Are agents and fiduciaries of the corp. have actual and apparent authority to manage the business.