MrAce of Oink Inc

question 163

Multiple Choice

Mr.Ace of Oink Inc.,a closely held corporation,is one of three shareholders.After several years of considerable success,the corporation hit hard times.The other shareholders,Mr.Bane and Mr.Curr,in the best interests of the corporation,voted Mr.Ace out as a director and voted not to renew his employment contract.Upset by these events,Mr.Ace wanted to sell his interest and leave the corporation.The other two shareholders,however,refused to buy his shares.Furthermore,when Mr.Ace attempted to sell his shares to his brother,who was interested in the corporation,the other shareholders refused to register the brother as a member.Which of the following is true?

• A)Mr.Ace could sue the corporation for breach of its fiduciary duty.
• B)Mr.Ace could have avoided such a dilemma through the provisions of a shareholders' agreement.
• C)The court would "lift the corporate veil" because Mr.Bane and Mr.Curr were hiding behind the corporation to commit a fraud.
• D)Mr.Ace could sell his shares to whomever he chose and the remaining shareholders must register the new owner.
• E)Because of statutory pre-emptive right provisions,if Ace wants out,the other shareholders must buy him out.

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Definitions:

Special-Interest Effect

Any political outcome in which a small group ("special interest") gains substantially at the expense of a much larger number of persons who each individually suffers a small loss.

International Agreement

A formal accord between two or more countries that governs trade relations, environmental policies, or other aspects of international cooperation.

Tariffs

Taxes imposed by a government on goods and services imported from other countries, intended to protect domestic industries from foreign competition.

Agricultural Products

Items produced through farming and agriculture, including foods, fibers, fuels, and raw materials.