Asked by Jacob Willard on Jul 09, 2024
Verified
Alan,Bob,Charles,David,and Edward are the only shareholders of Harbin Corporation.It is a close corporation.Each owns 20 percent of the shares.There are five director positions and each serves as a director.One day the other four find out that Edward has committed a serious crime.They decide that they wish to expel him from the corporation.What action may the others take? Discuss.
Close Corporation
A type of corporation characterized by a limited number of shareholders, no public market for its shares, and often more informal management and operations.
Commits A Serious Crime
An action undertaken by an individual that is illegal and considered gravely harmful to society, warranting significant legal penalty.
Expel
To expel means to officially force someone to leave a place or organization, often due to violation of rules or norms.
- Attain familiarity with the protocols and legal benchmarks in board meetings and the obligations of directors under multiple corporate governance models.
Verified Answer
TR
Talvi RaamatJul 11, 2024
Final Answer :
Edward is a shareholder.The only way he may be divested of his shares is if there is language in the share certificate or shareholder agreement that permits the corporation to buy out Edward under such circumstances.However,the MBCA permits directors to be removed with or without cause.Provided at least three of the shareholders agreed,there are enough votes to remove Edward from the board of directors,thus effectively taking away any ability to manage or direct the organization.
Learning Objectives
- Attain familiarity with the protocols and legal benchmarks in board meetings and the obligations of directors under multiple corporate governance models.