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

question 128

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 directors refused to declare a dividend.
• C) 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.
• D) If the directors solicited proxies from all of the shareholders.
• E) If the shareholders refused to enter into a shareholder's agreement.

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Definitions:

Lessen Competition

A situation or strategy in which there is a reduction in the intensity of competitive forces within a market or industry.

Patent Legislation

Laws that grant inventors exclusive rights to their inventions, preventing others from making, using, or selling the invention without permission.

Federal Trade Commission

A federal agency established to promote consumer protection and the elimination and prevention of anticompetitive business practices.

Wheeler-Lea Act

A United States law that amended the Federal Trade Commission Act to prohibit unfair or deceptive acts in commerce.