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.

---

Definitions:

Proactive Personalities

Individuals who actively shape their environments, taking initiative to improve their situation rather than passively adapting to circumstances.

Traits

Enduring characteristics or qualities that define an individual's behavior.

Achievement-oriented

Having a strong desire or determination to achieve success or accomplish specific goals, often through significant effort.

Attribute Success

The tendency to explain one's achievements based on personal qualities and effort.