To Prevent a Majority Shareholder from Dominating the Management and Operation

question 42

Multiple Choice

To prevent a majority shareholder from dominating the management and operation of a close corporation, the firm should

• A)require more than a majority of directors approve any board action.
• B)restrict the transferability of shares to outside persons.
• C)reorganize into a sole proprietorship or partnership.
• D)hold special shareholders' or directors' meetings on an annual basis.

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Definitions:

Big Bank

A term referring to the largest banks in a country or region, often with a significant influence on the national or global economy.

Foreclosure Action

A legal process by which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as the collateral for the loan.

Midland Bank

A historical financial institution that was one of the Big Four banking groups in the United Kingdom before it was acquired by HSBC in 1992.

Foreclosed

A legal process in which a lender attempts to recover the balance of a loan from a borrower who has failed to make payments, by forcing the sale of the asset used as the collateral for the loan.