Mr Malik, an Investment Counsellor by Training, Sat on the Board

question 89

Multiple Choice

Mr. Malik, an investment counsellor by training, sat on the board of directors of Talbot Enterprises Ltd., a broadly held corporation. During a meeting of the board, he advised the corporation to buy some condominiums given the present soft real estate market. Malik did not disclose that he owned shares in the corporation that owned the property, nor did he disclose that he would be entitled to a commission for every unit he helped sell. When the question was put to the board, he voted for it. Read each of the following statements separately and indicate which is true.

• A) A director must disclose his interest in a contract before the board, but is not required to refrain from voting for it.
• B) Malik doesn't have to disclose his interest in the contract if he has signed an agreement with the other directors relieving them of their fiduciary duties.
• C) A shareholder, learning of his actions, could proceed under the dissent procedure, which would cause the corporation to buy his shares at fair market value.
• D) Malik has breached his fiduciary duty, but if the sale was fair, he need not give up his profits.
• E) Malik must account for any profit made because he failed to disclose his interest and voted on the question.

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Definitions:

Left Ear

The ear located on the left side of a person's head, significant in studies concerning auditory processing and lateralization of brain functions.

Basilar Membrane

A key component of the inner ear within the cochlea, crucial for translating sound vibrations into neural signals through its movement.

Hair Cells

Sensory cells found in the inner ear that convert sound vibrations into electrical signals, aiding in hearing and balance.

Olfactory Receptors

Specialized nerve cells in the nose involved in the sense of smell.