DE Bar DE Bar Business Organizations

Question 1

Under the Delaware General Corporation Law (DGCL), what is the default standard of judicial review for decisions made by a corporation's board of directors?

Accepted Answer

Business judgment rule

Answer

Under the DGCL, courts apply the business judgment rule, presuming directors acted on an informed basis, in good faith, and in the honest belief the action was in the corporation's best interests.

Question 2

Under the Delaware LLC Act, what document governs the internal affairs of a limited liability company?

Accepted Answer

Limited liability company agreement

Answer

The LLC agreement (operating agreement) governs the internal affairs of a Delaware LLC under 6 Del. C. § 18-101 et seq.

Question 3

Under the DGCL, which standard applies when the board of a Delaware corporation adopts a shareholder rights plan (poison pill)?

Accepted Answer

Unocal enhanced scrutiny

Answer

Defensive measures such as shareholder rights plans are subject to Unocal enhanced scrutiny, requiring the board to show a reasonable threat and proportionate response.

Question 4

In Delaware, which court has exclusive jurisdiction over corporate internal affairs disputes?

Accepted Answer

Court of Chancery

Answer

The Delaware Court of Chancery has exclusive jurisdiction over most corporate internal affairs matters, including fiduciary duty claims and disputes under the DGCL.

Question 5

Under the DGCL, what vote is required to approve a merger of a Delaware corporation (absent a supermajority provision)?

Accepted Answer

Majority of outstanding shares entitled to vote

Answer

DGCL § 251 requires approval by a majority of the outstanding shares entitled to vote, not merely a majority of a quorum, for a merger.

(DE Bar) Delaware Bar Exam Practice Test

(DE Bar) Delaware Bar Exam Practice Test

DE Bar DE Bar Business Organizations