Which of the Following Situations Would Allow a Shareholder to Sue

question 116

Multiple Choice

Which of the following situations would allow a shareholder to sue on behalf of the corporation?

• A) If four of the five directors, in the best interests of the corporation, voted against the fifth as director, voted to end the employment contract of the fifth, and voted not to buy his shares.
• B) If the corporation had been wronged (lost $30,000) by the negligent and fraudulent acts of one of its directors, but the corporation refused to make any action against the wrongdoer.
• C) If the shareholders refused to enter into a shareholder's agreement.
• D) If the directors took an action that unfairly prejudiced a shareholder.
• E) If the directors issued shares without offering any of the new issue to the present shareholders.

---

Definitions:

Consumer Education

Programs and efforts designed to inform individuals about their rights, responsibilities, and savvy practices when purchasing goods and services.

Legal Action

The process of pursuing a lawsuit or litigation to enforce or defend one's legal rights.

Ad Substantiation

An FTC standard requiring that advertisers have a reasonable basis for the claims made in their ads.

Reasonable Basis

A concept often used in law and regulations, referring to a well-founded rationale for decisions or actions.