Corporation Management & Control - Next Generation Bar Exam

1. Under the MBCA default rule, what constitutes a quorum at a shareholders' meeting?

   A majority of the votes entitled to be cast on the matter. The articles may set a different quorum.

2. What is the purpose of cumulative voting for directors?

   To let minority shareholders concentrate their votes and elect at least one director. Under the MBCA, cumulative voting applies only if the articles provide for it.

3. Under the MBCA default rule, how does a board act at a meeting?

   By a majority of the directors present, if a quorum of a majority of the fixed number of directors is present. The articles or bylaws may require a greater number.

4. Under the MBCA, what is required for the board to act without a meeting?

   Written consent of every director. Without unanimous consent, the board must act at a properly called meeting.

5. Under the MBCA default rule, when is a shareholder action other than director election approved?

   When the votes cast in favor exceed the votes cast against, with a quorum present. Abstentions do not count against the proposal under this standard.

6. Under the MBCA, what may a unanimous shareholder agreement do in a corporation whose shares are not publicly traded?

   Restrict the board's discretion or eliminate the board and vest its powers in others. Such agreements must be set out in the articles, bylaws, or a written agreement signed by all shareholders.

7. Under the MBCA default rule, what is required for shareholders to act without a meeting?

   Written consent of all shareholders entitled to vote. The articles of a corporation may permit action by less than unanimous written consent.

8. Under the MBCA, on what grounds may shareholders remove a director?

   With or without cause, unless the articles require cause. A director elected by a voting group may be removed only by that group.

9. Under the MBCA default rule, how are directors elected at a shareholders' meeting?

   By a plurality of the votes cast. The candidates receiving the most votes win, even without a majority.

10. What makes a shareholder's proxy irrevocable?

    A statement that it is irrevocable, coupled with an interest such as a pledge or a purchase of the shares. Without an interest, a proxy is revocable even if it says otherwise.

11. Under the MBCA, who appoints corporate officers?

    The board of directors, unless the bylaws provide otherwise. Officers' duties and authority come from the bylaws or the board.

12. Under the MBCA, under whose direction is a corporation's business and affairs managed?

    The board of directors. Corporate powers are exercised by or under the authority of the board, subject to the articles or a valid shareholder agreement.

13. Which corporate actions require shareholder approval in addition to board approval?

    Fundamental changes: amending the articles, mergers, sales of substantially all assets, and dissolution. Ordinary business decisions are for the board.

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