If a Corporation Had Been Wronged by Negligent and Fraudulent

question 57

Multiple Choice

If a corporation had been wronged by negligent and fraudulent acts of one of its directors and consequently suffered a $45,000 loss, and the board of directors would not take any action on behalf of the corporation against the wrongdoer, which of the following is true?

• A) The shareholders could force the directors to start the action on the basis of their pre-emptive right.
• B) If the company failed to commence an action through its authorized agents (e.g., its directors), no action could be taken, because a corporation is merely a legal concept and must act through its authorized agents.
• C) The shareholder could proceed under the dissent procedure and force the corporation to pay them a fair market value for their shares.
• D) A derivative action allows a shareholder to commence an action on behalf of the corporation.
• E) The shareholders could sue the corporation for oppression.

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Definitions:

Seed Coat

The outer protective covering of a seed.

Megaspore

A type of spore in plants that develops into a female gametophyte, involved in the reproductive process.

Sporophyte Generation

The stage in the life cycle of plants and algae where the organism is diploid and generates spores.

Gametophyte

The haploid stage in the life cycle of plants and algae that produces gametes through mitosis for sexual reproduction.