DE Bar DE Bar Business Organizations 2

Question 1

Under the DGCL, which doctrine requires entire fairness review when a controlling shareholder stands on both sides of a transaction?

Accepted Answer

Entire fairness doctrine

Answer

When a controlling shareholder is on both sides of a transaction, Delaware requires entire fairness review, examining both fair dealing and fair price.

Question 2

Which Delaware statute governs the formation and operation of limited liability companies?

Accepted Answer

6 Del. C. Title 18

Answer

The Delaware Limited Liability Company Act is codified at 6 Del. C. §§ 18-101 through 18-1208 (Title 18).

Question 3

Under Revlon, Inc. v. MacAndrews & Forbes Holdings, when does a Delaware board's duty shift to maximizing shareholder value?

Accepted Answer

When the sale or breakup of the company becomes inevitable

Answer

Revlon duties are triggered under Delaware law when the sale or breakup of the company becomes inevitable, requiring the board to maximize value for shareholders.

Question 4

Under the DGCL, what is the purpose of a Section 220 demand?

Accepted Answer

To inspect corporate books and records

Answer

DGCL § 220 permits shareholders to demand inspection of the corporation's books and records for a proper purpose.

Question 5

Under the DGCL, what is a Section 102(b)(7) provision?

Accepted Answer

A provision eliminating director monetary liability for duty-of-care breaches

Answer

DGCL § 102(b)(7) allows corporations to eliminate or limit director personal liability for breaches of the duty of care, but not the duty of loyalty.

(DE Bar) Delaware Bar Exam Practice Test

(DE Bar) Delaware Bar Exam Practice Test

DE Bar DE Bar Business Organizations 2