Mr a Is the Sole Shareholder of X Ltd

question 89

Multiple Choice

Mr. A is the sole shareholder of X Ltd., and is also a director of Y Ltd. Y Ltd. is negotiating to buy property from X Ltd. Which of the following is false?

• A) Mr. A. has a duty to act in the best interests of Y Ltd., and to avoid any conflict of interest.
• B) So long as Mr. A discloses his position to the board of directors of Y Ltd., he can vote in favour of the contract at the directors' meeting.
• C) To protect himself, Mr. A must disclose his interest to the other directors and refrain from voting or influencing the decision.
• D) Failure to disclose his interest will make Mr. A liable to Y Ltd. for any profits he makes on the transaction and for any losses suffered by Y Ltd.
• E) Mr. A. does not owe a fiduciary duty to X Ltd. or to his fellow X Ltd. shareholders.

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Definitions:

Game Playing

Engaging in competitive activities governed by rules for the purpose of entertainment, strategy, or education.

Avoidance

A behavioral or psychological strategy where an individual stays away from certain situations, thoughts, or emotions due to perceived discomfort or risk.

Communication Withdrawal

The act of intentionally reducing or stopping communication with others as a response to conflict or discomfort.

Communication Disruption

A breakdown or failure in the exchange of information between entities, leading to misunderstandings or loss of opportunities.