True/False
Indicate whether the
statement is true or false.
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1.
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Corporations can be sued, but they cannot sue in
their own right.
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2.
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There are provisions that allow corporate directors
and officers to be
personally liable for decisions they make on behalf of a
corporation.
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3.
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The business judgment rule protects corporate
officers and directors for good
faith business decisions, even when they are wrong.
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4.
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The business judgment rule protects corporate
officers, directors, and
shareholders.
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5.
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The business judgment rule also protects directors
and officers who are
negligent in their duties.
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6.
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The Sarbanes-Oxley Act extended the business
judgment rule to low-level
corporate officers.
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7.
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Ultra vires refers to actions taken by corporations
that are not authorized in
their charter.
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8.
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Corporate officers cannot commit ultra vires
actions.
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9.
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"Piercing the corporate veil" refers to
actions by shareholders against
corporate officers.
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10.
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Shareholders can sue on behalf of the
corporation.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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11.
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To compensate for business losses or expenses tied
to an individual’s
conduct.
a. | Indemnify | b. | Accuse | c. | Rectify | d. | Ratify |
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12.
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A rule that protects corporate officers and
directors from liability for business
decisions made in good faith.
a. | Piercing the corporate veil | b. | Honorary judgment rule | c. | Best evidence
rule | d. | Business judgment
rule |
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13.
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This act made sweeping revisions in SEC filing
requirements and the duties
imposed on corporate directors and officers who certify the accuracy
of financial
reports.
a. | The Annual Reports Act | b. | The SEC Act | c. | The Sarbanes-Oxley
Act | d. | None of the above |
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14.
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An action carried out by an officer or director of
a corporation that is not
authorized by the corporate charter.
a. | Illegal act | b. | Ultra vires act | c. | Nonsequential
act | d. | All of the above |
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15.
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A showing that the plaintiff has a personal stake
in the litigation; his or her
personal rights, financial interests, property rights, or other
legally recognized
rights will be impacted by the lawsuit.
a. | Protected interest | b. | Constitutional right | c. | Pre-emptive
right | d. | Standing |
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16.
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A rule that allows courts to disregard corporate
protections and allow suits
against corporate creators and shareholders.
a. | Derivative action | b. | Piercing the corporate veil | c. | Statutory action | d. | Standing |
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17.
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A lawsuit brought by shareholders in the name of
and on behalf of the
corporation.
a. | Corporate sanction | b. | Limiting action | c. | Derivative
action | d. | None of the above |
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18.
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A Latin phrase that means “let the master
respond”; a legal theory that
imposes legal liability on an employer for the actions of the
employee when the
employee is carrying out his duties for the employer.
a. | Quid pro quo | b. | Caveat emptor | c. | Res ipsa
loquitur | d. | Respondeat
superior |
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19.
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Who brings a derivative action?
a. | Corporate officers | b. | Secretary of State's office | c. | Shareholders | d. | None of the
above |
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20.
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All of the following are elements of the business
judgment rule except:
a. | Good faith | b. | Acting out of necessity | c. | Actions were
reasonable under the circumstances | d. | That the officer
or director reasonably believed that the best interests of
the corporation were furthered by the
action |
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