ExpertHard1 markMultiple Choice
CPA · Question 14 · Area II: Business Law
Under the Revised Model Business Corporation Act, which of the following actions generally requires shareholder approval?
Under the Revised Model Business Corporation Act, which of the following actions generally requires shareholder approval?
Answer options:
A.
Declaration of a cash dividend.
B.
Sale of substantially all corporate assets outside the regular course of business.
C.
Appointment of corporate officers.
D.
Amending the corporate bylaws (in most jurisdictions).
How to approach this question
Distinguish between day-to-day management (Officers), policy/oversight (Directors), and fundamental changes (Shareholders).
Full Answer
B.Sale of substantially all corporate assets outside the regular course of business.✓ Correct
B
Fundamental corporate changes require shareholder approval. These include: (1) Amending the Articles of Incorporation, (2) Mergers/Consolidations, (3) Dissolution, and (4) Sale of substantially all assets outside the ordinary course of business. Dividends and officer appointments are Board functions.
Common mistakes
Thinking shareholders vote on dividends (they don't; the Board does).
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