BUL 3130 CORRECT EXAM QUESTIONS AND
ANSWERS SET A+
✔✔Articles of Corporation Requirements - ✔✔1. Name of the Corporation
2. Number of authorized shares
3. Name and street address of the Corporations initial registered agent and office
4. Name and address of each incorporator
✔✔Benefit Corporation (B Corp) - ✔✔a corporate form for businesses whose stated
goals are to combine making a profit with benefiting society and the environment
✔✔corporate bylaws - ✔✔I. the basic rules governing how a corporation is organized
and how it conducts its business
II. adopted at the first organizational meeting
II. cannot conflict with state statues or the articles of incorporation [RMBCA 2.06]; which
states shareholders and/or the board of directors may amend or repeal the bylaws
✔✔Examples of matters covered under corporate bylaws - ✔✔-voting requirements for
shareholders
-the election of the board of directors
-the methods of replacing directors
✔✔Corporate Directors - ✔✔people elected by the shareholders to make broad policy
decisions in the running of a corporation
✔✔Corporate officers - ✔✔I. Employees of a corporation who are appointed by the
board of directors to manage the day-to-day operations of the corporation
II. eg. the chairman of the board, president, executive vice presidents, corporate
secretary, treasurer, and any other top executive appointed by the board of directors
✔✔Duty of Care - ✔✔1. Act in good faith (honestly)
2. Exercise the care that an ordinarily prudent person would exercise in similar
circumstances
, 3. Do what he believes is in the best interests of the corporation [RMBCA 8.30 (a),
8.42(a)]
✔✔Duty of Loyalty - ✔✔requires directors and officers to subordinate their personal
interests to the welfare of the corporation
✔✔Who determines whether profits will be distributed as dividends or kept in retained
earnings - ✔✔Approved by Board of Directors
✔✔Business Judgment Rule (BJR) - ✔✔The principle pursuant to which a director or
officer is immunized from liability from consequences of a business decision that turns
negative as long as the decision was reasonable, informed, made in good faith, and in
the best interest of the corporation.
*The courts do not require directors and officers to manager "in hindsight," so in
determining BJR protection courts look at the circumstances at the time of the decision.
✔✔Types of Activity that require shareholder approval - ✔✔1. must approve
fundamental changes affecting the corporation before changes can be implemented;
such as bylaws and articles of incorporation
2. vote or elect to remove members of the board of directors
✔✔Corporate Veil - ✔✔The personal liability shield; the corporate protection that entitles
shareholders, directors, and officers to limited liability; can be pierced for improper
conduct of business or fraud.
✔✔Undercapitalization - ✔✔not having enough money available to the business to
cover shortfalls in sales or profits
✔✔Alter Ego Theory - ✔✔one method used by courts to pierce the corporate veil when
a shareholder fails to treat the corporate organization as a separate legal entity
✔✔Corporate Dissolution - ✔✔Process by which ALL corp assets are liquidated, all
corporate liabilities are paid off, and any remaining cash or other assets is distributed to
SHs (subject to any preferred shareholder preferences)
-- Corp does NOT cease to exist immediately upon commencement of dissolution
process -- all structures stay in place, but the PURPOSE of the corp changes (from
operation of biz, to liquidation of of all assets and winding up of biz affairs), and the
authority of actors becomes limited to that purpose (authority to pay off creditors, etc.)
3 types:
1. Voluntary dissolution
2. Administrative Termination
3. Judicial Dissolution
✔✔ Express Warranty - ✔✔1) Goods confirm to any affirmation of fact or promise
ANSWERS SET A+
✔✔Articles of Corporation Requirements - ✔✔1. Name of the Corporation
2. Number of authorized shares
3. Name and street address of the Corporations initial registered agent and office
4. Name and address of each incorporator
✔✔Benefit Corporation (B Corp) - ✔✔a corporate form for businesses whose stated
goals are to combine making a profit with benefiting society and the environment
✔✔corporate bylaws - ✔✔I. the basic rules governing how a corporation is organized
and how it conducts its business
II. adopted at the first organizational meeting
II. cannot conflict with state statues or the articles of incorporation [RMBCA 2.06]; which
states shareholders and/or the board of directors may amend or repeal the bylaws
✔✔Examples of matters covered under corporate bylaws - ✔✔-voting requirements for
shareholders
-the election of the board of directors
-the methods of replacing directors
✔✔Corporate Directors - ✔✔people elected by the shareholders to make broad policy
decisions in the running of a corporation
✔✔Corporate officers - ✔✔I. Employees of a corporation who are appointed by the
board of directors to manage the day-to-day operations of the corporation
II. eg. the chairman of the board, president, executive vice presidents, corporate
secretary, treasurer, and any other top executive appointed by the board of directors
✔✔Duty of Care - ✔✔1. Act in good faith (honestly)
2. Exercise the care that an ordinarily prudent person would exercise in similar
circumstances
, 3. Do what he believes is in the best interests of the corporation [RMBCA 8.30 (a),
8.42(a)]
✔✔Duty of Loyalty - ✔✔requires directors and officers to subordinate their personal
interests to the welfare of the corporation
✔✔Who determines whether profits will be distributed as dividends or kept in retained
earnings - ✔✔Approved by Board of Directors
✔✔Business Judgment Rule (BJR) - ✔✔The principle pursuant to which a director or
officer is immunized from liability from consequences of a business decision that turns
negative as long as the decision was reasonable, informed, made in good faith, and in
the best interest of the corporation.
*The courts do not require directors and officers to manager "in hindsight," so in
determining BJR protection courts look at the circumstances at the time of the decision.
✔✔Types of Activity that require shareholder approval - ✔✔1. must approve
fundamental changes affecting the corporation before changes can be implemented;
such as bylaws and articles of incorporation
2. vote or elect to remove members of the board of directors
✔✔Corporate Veil - ✔✔The personal liability shield; the corporate protection that entitles
shareholders, directors, and officers to limited liability; can be pierced for improper
conduct of business or fraud.
✔✔Undercapitalization - ✔✔not having enough money available to the business to
cover shortfalls in sales or profits
✔✔Alter Ego Theory - ✔✔one method used by courts to pierce the corporate veil when
a shareholder fails to treat the corporate organization as a separate legal entity
✔✔Corporate Dissolution - ✔✔Process by which ALL corp assets are liquidated, all
corporate liabilities are paid off, and any remaining cash or other assets is distributed to
SHs (subject to any preferred shareholder preferences)
-- Corp does NOT cease to exist immediately upon commencement of dissolution
process -- all structures stay in place, but the PURPOSE of the corp changes (from
operation of biz, to liquidation of of all assets and winding up of biz affairs), and the
authority of actors becomes limited to that purpose (authority to pay off creditors, etc.)
3 types:
1. Voluntary dissolution
2. Administrative Termination
3. Judicial Dissolution
✔✔ Express Warranty - ✔✔1) Goods confirm to any affirmation of fact or promise
