A Corporation May Sue a Director Owning More Than Ten

question 31

Multiple Choice

A corporation may sue a director owning more than ten (10) percent of any class of corporate stock who makes a profit by selling any such stock:

• A) if the sale is made more than six (6)months after the original purchase of the stock by the director.
• B) only if the stock was originally acquired with fraudulent intent.
• C) only if the stock was sold with fraudulent intent.
• D) if the sale was made less than six (6)months after the original purchase of the stock by the director.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members in the form of cash.

Stock Dividends

A dividend payment made to shareholders in the form of additional shares rather than cash.

Common Stock

A type of equity security that represents ownership in a corporation, providing voting rights and entitling the holder to a share of the company's success through dividends and/or capital appreciation.