3. Shareholders generally have the power and right to do each of the following e

Question

3. Shareholders generally have the power and right to do each of the following except:

A. to elect and remove officers.

B. to veto a board decision to pursue venture capital financing.

C. to approve structural changes in the corporation through the amending of the articles of incorporation.

D. to veto a board decision to issue more capital stock.

4. Melvin, a CPA, was hired by Buy-Um-Up Inc., to audit its financial statements. Due to his negligence, Melvin failed to discover that Morris, chairman the board of directors of Buy-Um-Up, had embezzled $400,000 of the company funds. Melvin finished the audit and issued an unqualified opinion. Six months later, Melvin read in the newspapers that Carl had been caught for embezzling a total of $1,000,000 of company funds. Carl resigned and the company funds were fully recovered from him. Buy-Um-Up sued Melvin. For how much, if anything, is Marvin liable?

A. $1,000,000

B. $400,000

C. $1,200,000

D. $600,000

E. Nothing, Melvin is not liable for Morris' embezzlement.

Explanation / Answer

3. Shareholders generally have the power and right to do each of the following except:

Ans - A. to elect and remove officers.

Explanation: - Shareholders may elect and remove directors, not officers. They have the power and right to veto a board decision to pursue venture capital financing and a board decision to issue more capital stock. They can approve structural changes in the corporation through the amending of the articles of incorporation.

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