Understanding Business and Personal Law

Chapter 29: Operating a Corporation

Operating a Corporation


1.	Corporations are managed by directors who
		A)	are responsible for seeing that the corporation acts within its powers.
		B)	are considered the owners of the corporation.
		C)	are entitled to notice of all regular and special meetings.
		D)	deal with the day to day operations of the business.


2.	Corporate officers
		A)	are responsible for seeing that the corporation acts within its powers.
		B)	are considered the owners of the corporation.
		C)	suggest business policy.
		D)	are appointed by the board of directors.


3.	A member-managed LLC is run by
		A)	the CEO of the corporation.
		B)	the owners and outside managers.
		C)	outside managers.
		D)	the owners.


4.	A pooling agreement allows shareholders to
		A)	attend the stockholder's meetings and vote in person.
		B)	vote a certain way on a particular issue.
		C)	transfer their voting rights to a trustee.
		D)	vote by proxy.


5.	The business judgment rule prevents insider trading.
		A)	TRUE
		B)	FALSE


6.	Directors can take business opportunities for themselves if they disclose the opportunity to the corporation.
		A)	TRUE
		B)	FALSE


7.	Management authority in an LLC is apportioned based upon the money contributed by each member.
		A)	TRUE
		B)	FALSE


8.	It is legal for shareholders to solicit the proxies of other shareholders to control the election of the board of directors.
		A)	TRUE
		B)	FALSE


9.	An example of insider trading is the buying or selling of stock just before some major development occurs that will affect the price of the stock.
		A)	TRUE
		B)	FALSE


10.	Shareholders have the right to
		A)	participate in the board of director's meetings.
		B)	vote only if they own preferred stock.
		C)	transfer or sell their stock.
		D)	receive dividends when the corporation has made a profit.