1. Which of the following is correct concerning the management of close corporations?

A. Modern close corporation statutes require close corporations to comply with most management formalities.

B. The MBCA Statutory Close Corporation Supplement grants the shareholders unlimited power to restrict the discretion of the board of directors.

C. The MBCA Statutory Close Corporation Supplement permits a close corporation to dispense with shareholders and directors.

D. The California General Corporation Law permits a close corporation to be managed as if it were a sole proprietorship.

E. All of the above are correct.

2. Toxins Inc. is a very successful chemical company. However, to reduce costs and further increase profits, the CEO of Toxins orders Toxins' employees to violate federal laws concerning labeling of chemicals. The United States Department of Justice file a lawsuit against Toxins for criminal violations of the law. Has Toxins committed criminal violations?

A. No, because the board of directors did not authorize the president or the other employees to violate federal law.

B. Yes, because a corporation is always liable for all the crimes committed by its employees

C. Yes, because the CEO, a high-level administrator of Toxins, authorized the crimes.

D. No, because a corporation is not liable for most crimes committed by its employees

E. None of the above answers is correct.