Powers and Authority of Directors and Officers

Question 1

Subject to any limitation set forth in the articles of incorporation, the management of the corporation’s business and the exercise of corporate power must:

Answer 1

Be: by or under the direction of the Board of Directors collectively

Question 2

Unless otherwise authorized by the articles or prior board decisions, individual directors do not have the power:

Answer 2

Set corporate policy or acts as its agent when entering into contracts

Question 3

The prerequisite of all board action is that it

Answer 3

it requires the participation of a quorum of the board

Question 4

What is a quorum

Answer 4

A quorum refers to the minimal portion of the authorized number of directors required to be present for board action to occur.

Question 5

Suppose that a party is identified as belonging to more than one of the three groups (directors, officers, and shareholders) that structurally comprise a particular corporation – what to do?

Answer 5

Analyze under each role

Question 6

The board acts only

Answer 6

In its collective capacity (as a quorum)

Question 7

the board can transact business in the absence of a meeting so long as there

Answer 7

A writing;
That describes the action taken;
Is signed by all the members of the board; and,
It is delivered to the corporation

Question 8

At a meeting of the board of directors duly held, board action requires the presence of a quorum.
Unless the articles or bylaws provide otherwise, a quorum of the board of directors consists of:

Answer 8

1. The majority of the number of fixed directors; or,

2. The majority of the directors immediately in office immediately before the meeting begins

Question 9

The articles or bylaws may provide for a different quorum rule so long as:

Answer 9

Quorum ≥ 1/3 of directors

Question 10

Assuming a quorum is present at a duly held meeting of the board, an act of the board occurs upon:

Answer 10

the decision of a majority of directors present; unless, articles or bylaws stipulate otherwsie

Question 11

What is required for a director’s presence at a metting

Answer 11

it requires only presence by means of communication that allow all participants in the meeting to hear each other during the meeting

Question 12

Regular board meetings notice requirement?

Answer 12

It’s regular: it be held without notice of date, time, place, or purpose

Question 13

Special board meetings notice requirement?

Answer 13

5-days notice of

1. Date,
2. Time,
3. Place of meeting

Question 14

the statutorily required notice for a special meeting need NOT include:

Answer 14

the notice of its purpose

Question 15

Waiver of notice can occur before or after the date and time stated in the notice by means of

Answer 15

a signed writing of director delivered to the corporation for filing in the minutes or corporate records

Question 16

Waiver can also be effected by a director’s attendance or participation in a meeting, unless the director:

Answer 16

Makes prompt objection to holding the meeting or transacting the business at the meeting; and,
Does not participate in the meeting

Question 17

Effect of the statement of corporate purpose in the articles of incorporation

Answer 17

authorizes the board’s powers while also limiting the authority of the corporation’s representatives.

Question 18

Ultra Vires Doctrine

Answer 18

a corporation cannot be obliged to perform an action that is beyond its powers as authorized in its articles of incorporation.

Question 19

Effect of the statement of corporate purpose in the articles of incorporation - North Carolina Statute

Answer 19

The limits of authority of a corporation cannot be asserted between
Corporations - Third Parties
Shareholders - Thridparties

Question 20

The limits of a corporation’s authority can be asserted in the following instances:

Answer 20

1. Preceding by a shareholder to enjoin an action not authorized by the articles
2. Preceding by the corporation or a derivative suit brought against directors or officers for violation of their authority

Question 21

Board’s discretion to declare a dividend

Answer 21

the board of directors has the discretion to decide whether there will be a dividend and, if so, the amount of the dividend.

Question 22

the board cannot declare a dividend if, after giving it effect:

Answer 22

1. The corporation would not be able to pay its debts as they become due during the regular course of business; or,
2. the corporation’s assets would then be less than its liabilities

Question 23

A corporate officer may, on the corporation’s behalf, enter into any transaction for which

Answer 23

She has actual authority: express or implied pursuant to

1. Article of Incorporation
2. By laws
3. Employment Contract
4. Board Resolution

Question 24

Corporate officers also have implied authority to

Answer 24

Enter into transactions that are reasonably related to performing the duties for which they are responsible.

Question 25

The powers of a corporate officer are the:

Answer 25

Powers of an agent

Question 26

In determining the extent of a corporate officer’s implied authority, a court will consider

Answer 26

the corporation’s past practices as well as the customary practices in similar businesses.

Question 27

If a corporate officer acts beyond his actual authority, consider

Answer 27

whether the officer had apparent authority, or

whether the officer’s actions were later ratified by the Board

Question 28

The rule of agency

Answer 28

All apply to corporate officers

Question 29

What are Officers authorized to do

Answer 29

Duties relating to the usual and ordinary course of the company’s business

Question 30

What can officers not do?

Answer 30

Fundamental changes to the corporation and the declaration of dividends is not within the ordinary course of business

Question 31

Powers of officers in dissolution?

Answer 31

The general powers and authority of directors and officers remain unchanged during this period, although the business transacted must be appropriate for a company winding up its affairs.