ExpertHard1 markMultiple Choice
CPA · Question 49 · Area II: Business Law
Under the Revised Model Business Corporation Act, which of the following actions requires shareholder approval?
Under the Revised Model Business Corporation Act, which of the following actions requires shareholder approval?
Answer options:
A.
Declaration of a cash dividend.
B.
Election of officers.
C.
Sale of substantially all corporate assets outside the ordinary course of business.
D.
Amending the bylaws (unless reserved to shareholders).
How to approach this question
Fundamental Changes (DAMS) require shareholder approval: Dissolution, Amendment of Articles, Merger, Sale of substantially all assets.
Full Answer
C.Sale of substantially all corporate assets outside the ordinary course of business.✓ Correct
C
Fundamental corporate changes, such as a merger, dissolution, amendment of articles of incorporation, or sale of substantially all assets outside the ordinary course of business, require approval by the board AND the shareholders.
Common mistakes
Thinking shareholders declare dividends (they don't; the Board does).
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