What Best Describes the Circumstances in Which a Director May

question 34

Multiple Choice

What best describes the circumstances in which a director may transact with the corporation?

• A)Procedural safeguards to avoid conflicts of interest and to provide transparency are observed in connection with the approval of the transaction and it is fair and reasonable to the corporation.
• B)The corporation receives a benefit from the transaction.
• C)A judge has given approval to the transaction.
• D)The director abstains from voting when the directors vote on the approval of the transaction.
• E)The director provides a notice to the board of benefits the director will receive from the transaction.

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Definitions:

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials and labor.

Fixed Costs

Expenses that remain constant regardless of the amount of production or output, like lease payments or wages.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, which are incurred regardless of the amount of goods or services produced.

Economic Profit

Profit that accounts for both explicit costs and opportunity costs.