Art Raskle Was an Officer, Director, and Employee of a Broadly

question 24

Multiple Choice

Art Raskle was an officer, director, and employee of a broadly held corporation. At a directors' meeting, he was surprised but pleased to learn that the corporation was discussing a resolution to contract with the firm of Fielding's Office Supply for $20,000 worth of office equipment. He and a businesswoman had recently bought that business, in which Raskle has a 45% interest. Raskle voted for the contract and the resolution passed without discussion by a vote of 6-0. Several months after completion of the purchase, the other directors learned of Raskle's interest in Fielding's Office Supply and called on him to account to the corporation for any profit made. Which of the following is true?

• A) Raskle is not in breach of any fiduciary duty because the dollar value of the contract falls below the minimum statutory threshold.
• B) Raskle must account for any profit made because he failed to disclose his interest and voted on the question.
• C) Raskle has breached his fiduciary duty but if the sale was "fair" and if the shareholders approved the sale by a special resolution after full disclosure, he need not account to the corporation for any profit made.
• D) Raskle is not in breach of his fiduciary duty because directors of corporations vote on contracts in which they have an interest all the time.
• E) Raskle has not breached his fiduciary duty because his vote did not determine the matter. Had he not voted, the result would have been the same.

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