Business and Personal Law

Chapter 17: Operating a Corporation

Self Check Answers

Section 17.1

  1. Directors: elected by shareholders; make broad policy decisions. Officers: chosen by directors; run day-to-day affairs.
  2. the right to receive a stock certificate and dividends, examine the corporate books, transfer all shares, maintain a proportionate share of stock, exercise a vote for each share of stock owned, and sue
  3. business judgment rule, fairness rule

Section 17.2

  1. Stocks represent a shareholder's investment in a corporation; bonds are notes issued for money borrowed by the corporation.
  2. offer to buy a specific number of shares at a specific price, also called a takeover bid
  3. corporation repeatedly conducts business illegally; fails to file annual reports, pay franchise taxes, or maintain a statutory agent for service of process; exceeds its authority; or is formed fraudulently
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