ExpertHard1 markMultiple Choice
CPA · Question 58 · 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 dividends.
B.
Sale of substantially all corporate assets outside the ordinary course of business.
C.
Hiring of corporate officers.
D.
Amending the bylaws (minor administrative changes).
How to approach this question
Shareholders vote on 'DAMS': Dissolution, Amending Articles (fundamental), Mergers, Sale of Assets (substantial).
Full Answer
B.Sale of substantially all corporate assets outside the ordinary course of business.✓ Correct
B
Fundamental corporate changes, such as a merger, dissolution, or sale of substantially all assets outside the ordinary course of business, require shareholder approval. Day-to-day management (dividends, hiring) is the Board's domain.
Common mistakes
Thinking shareholders declare dividends.
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