Series 7 practice questioneasyEquity Securities — Common Stock — Scenario
Which of the following corporate actions requires shareholder approval?
- ADeclaring a quarterly dividend
- BHiring a new CEO
- CApproving a merger or acquisition✓ Correct answer
- DSetting executive compensation
Explanation
Why C — Approving a merger or acquisition
Shareholders must vote to approve major corporate actions such as mergers, acquisitions, stock splits, and amendments to the corporate charter. Declaring dividends is a decision made by the board of directors, as is hiring officers and setting compensation. Shareholders elect the board but do not make day-to-day management decisions.
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