Which of the Following Situations Would Allow a Shareholder of a Closely

question 81

Multiple Choice

Which of the following situations would allow a shareholder of a closely held corporation, with permission of the court, 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 director, voted to end the employment contract of the fifth director, and voted not to buy his shares.
• B) If the corporation had been wronged by the negligent and fraudulent acts of one of its directors, but the corporation refused to take any action against the wrongdoer.
• C) If the shareholders refused to enter into a shareholder's agreement.
• D) If the directors refused to declare a dividend.
• E) If the directors solicited proxies from all of the shareholders.

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Definitions:

Be Cautious

An admonition advising individuals to act with care and consideration of potential risks.

Thought-Activated Software

Software interfaces that are controlled through brain waves or thoughts, enabling hands-free operation.

Expected Gain

The anticipated value or return from an investment, calculated by assessing probable outcomes and their probabilities.

Revenue

The income that a business receives from its normal business activities, usually from the sale of goods and services to customers.