If a Corporation Had Been Wronged by Negligent and Fraudulent

question 38

Multiple Choice

If a corporation had been wronged by negligent and fraudulent acts of one of its directors and consequently suffered a $45,000 loss, and the board of directors would not take any action on behalf of the corporation against the wrongdoer, which of the following is true?

• A) The shareholders could force the directors to start the action on the basis of their "pre-emptive right."
• B) The shareholder could proceed under the "dissent" procedure and force the corporation to pay them a fair market value for their shares.
• C) A derivative action allows a shareholder to commence an action on behalf of the corporation.
• D) If the company failed to commence an action through its authorized agents (e.g., its directors), no action could be taken, because a corporation is merely a legal concept and must act through its authorized agents.
• E) The shareholders could sue the corporation for oppression.

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Definitions:

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