1. Gina gets an offer from Tim, a nonshareholder, to buy her stock. The shareholder agreement contains a right of first refusal provision. Gina must
A. refuse to sell the stock to any outsider including Tim.
B. obtain a fair appraisal and charge Tim full market value for the stock.
C. first offer the stock to the existing shareholders.
D. not sell, but only if the sale is due to bankruptcy or divorce.
2. A certain business organization has a separate legal existence from its owners. It doesn't itself pay taxes. This business organization is a
A. corporation.
B. partnership.
C. LLC.
D. franchise.
3. Generally, the most important provision in a shareholder agreement is the
A. prohibition against the limited partner participating in management of the entity.
B. buy-sell arrangements, because having an outsider become an owner can be very disruptive.
C. buy-sell arrangements, because otherwise shareholders may charge too high a price to outsiders who don't have inside information about the actual value of the business.
D. quorum requirements, because the state statute is silent on this issue.
4. A corporation is in disarray because of widespread theft in the sales force and shipping department. Firing the guilty parties is most properly the responsibility of the corporate
A. officers.
B. shareholders.
C. board of directors.
D. tax accountants.