The Directors Held Their Last Meeting on December 31 at 4:30

question 130

Multiple Choice

The directors held their last meeting on December 31 at 4:30 p.m., and it was conducted more like a party than a usual meeting. A director was negligent in signing a promissory note, which cost the corporation $15,000. Furthermore, the director was in breach of his fiduciary duty because the note was paid to a corporation in which he had an interest. Which of the following is true?

• A) The shareholders could force the director to pay the $15,000 to the corporation by insisting on their pre-emptive rights.
• B) If the corporation failed to start 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 proper plaintiffs in the action are the shareholders, under the relief from oppression provision.
• D) A shareholder could commence an action on behalf of the corporation against the director if he gets the court's permission to do so.
• E) The shareholders could dissent to this act and force the corporation to buy them out at fair market value.

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Definitions:

Feudalism

A social and economic system in medieval Europe, where land was held on condition of allegiance and service to a lord, with society structurally divided into classes such as lords, vassals, and serfs.

Less Mature

Describes an individual or entity showing a lower level of growth, development, or sophistication.

Targets of Violence

Individuals or groups that are subjected to harm, aggression, or assault by others.

Channel Anger

The process of directing feelings of anger towards productive or constructive activities or outcomes.