Introductory Business Law CLEP Prep Practice Exam

How are most directors of a corporation elected?

1. Externally

2. By shareholders

3. By employees

4. By directors

The correct answer is: By shareholders

Directors of a corporation are responsible for governing and overseeing the company's operations. They are elected by shareholders, who are the owners of the company, to represent their interests and make important decisions on their behalf. While other options such as selecting them externally or by employees may occur in some cases, the most common and standard way to elect directors is through shareholder votes. This ensures that the directors are chosen by the people who have a financial stake in the company and can hold them accountable for their actions. Electing directors by other means may not always align with the shareholders' best interests. Therefore, option B, by shareholders, is the correct answer.