Reference no: EM132236427
1. Dawson states that he is Chairman of the Board and the Chief Executive Officer of the company. This makes him:
a. a captive director.
b. a free director.
c. an inside director.
d. an outside director.
2. Assume that Dawson and the rest of the board of directors decide in good faith to rebuild the plant in Miami and to pay the workers. While making this decision, the board follows all of its duties; however, the decision turns out to be a horrible one and the company goes bankrupt as a result. Which of the following is true?
a. Dawson and the other board members would have personal liability because of the business judgment rule.
b. Dawson and the other board members would have personal liability because of the ultra vires doctrine.
c. Dawson and the other board members would have personal liability because the shareholders could pierce the corporate veil.
d. Dawson and the other board members would be protected from liability because of the business judgment rule.
3. Assume that the question of whether to rebuild the plant in Miami or in China came to a vote by the board of directors. The board voted to move the plant to China. Dawson thought that this was in violation of the duty of care. He was the only director to vote against the move. It turns out that he was correct and the shareholders decide to sue the directors. Which of the following is true?
a. Dawson would be protected from a suit by the shareholders since he voted against the move.
b. Dawson would be protected since the rest of the shareholders voted in favor of the move.
c. The best protection Dawson would have is if he was identified as a dissenting director in the company's minutes.
d. The only protection that Dawson would have is if he had resigned from the board of directors.
4. Assume that the question of whether to rebuild the plant in Miami or in China came to a vote by the board of directors. The board voted to move the plant to China. The company lost money because of the decision, and the shareholders sued. The shareholders lost the lawsuit and Dawson was reimbursed by the corporation for his personal legal expenses. This was due to Dawson’s:
a. right to indemnification.
b. preemptive rights.
c. right to participation.
d. right of inspection.