Week 3 Ch9-11 Review Questions

Review Questions Name Instructor Institution Date Chapter 9 Review Questions 1 Where does a committee get its authority? Who is ultimately responsible for the acts of the committee? It gets its authority from the board of directors. The chairperson of the committee is responsible for the acts of the committee. But overall, it is the board of directors which is responsible. 2 What are the three types of duties a director owes to the corporation? First is fiduciary duty. Second is duty of loyalty and third is duty of care. 3 If a board of directors, exercising due care, makes a poor business decision that results in a substantial financial loss to the corporation, can the shareholders of the corporation look to the directors’ personal assets to recover their damages? What if one director withheld information from the other directors and personally benefited from the decision? As long as the director acts in contravention to the standard set rules and breaches any of the aforementioned duties, then they are liable for the damages. 4 Suppose that Albert is on the board of directors of Acme Sailboard Company, Inc. As the result of a contract dispute, Acme Sailboard Company, Inc., and Albert are both named in a lawsuit brought by one of their suppliers. If Albert is found at the trial to be innocent of any wrongdoing, who is responsible for paying his attorneys’ fees and legal expenses? Acme Inc would be responsible for the fees and legal expenses, in line with Sec. 8.52 of the MBCA which emphasizes on the indemnity of the directors by the companies representing the companies. What if it is determined at trial that there has been an illegal conversion of funds by Albert that resulted in the lawsuit? In this case, Albert would be liable for his own fees since he is defending himself against wrongdoings committed by himself, and not the company. In this case therefore, the Sec. 8.51 of the MBCA doesn’t indemnify them(Schneeman, 2002). 5 Can a corporation incorporated under a state following the MBCA consist of one individual who is an officer, director, and shareholder? Yes it can. 6 Must all corporations have a board of directors? It is not a must. It depends on the statutory requirements of a given state or region. 7 Who typically elects the officers of the corporation? The board of directors. 8 Under the MBCA, what is the minimum number of votes required to pass a resolution of the shareholders if 1,000 ...