Fact Pattern 41-4​ Diversified Corporation's Articles of Incorporation Prohibit a Sale of Its

question 54

Multiple Choice

Fact Pattern 41-4​
Diversified Corporation's articles of incorporation prohibit a sale of its assets without a vote of the board of directors. Diversified's officers sell some assets to Enterprise Company without notice to the board. The officers also fail to pay Diversified's taxes on time, and some Diversified funds are not accounted for.
-Refer to Fact Pattern 41-4. With respect to Diversified's shareholders, this conduct is most likely​

• A) ​not oppressive because it is undertaken by Diversified's officers.
• B) ​oppressive because Diversified's directors may be personally liable.
• C) ​oppressive because Diversified's shareholders may be personally liable.
• D) ​oppressive because it departs from the standards of fair dealing.

---

Definitions:

Taxes

Mandatory financial charges or levies imposed by a government on individuals or entities to fund public expenditures.

Debt Ratio

A financial ratio that compares a company's total debt to its total assets, indicating the proportion of assets financed with debt.

TIE

Times Interest Earned, a financial ratio that measures a company's ability to meet its debt obligations based on its current income.

Operating Costs

The day-to-day expenses involved with running a business, excluding costs associated with production.