Asked by Aspen Arellano on Jun 01, 2024
Verified
Because a director of a closely held corporation breached his duties to the corporation, the corporation lost $15,000. Despite the urging of the shareholders, the board of directors refused to begin an action on behalf of the corporation. Which one of the following provisions would aid the shareholders?
A) Relief-from-oppression provisions
B) Pre-emptive right provisions
C) Indoor-management rule
D) Derivative-action provisions
E) Dissent procedure
Derivative-Action Provisions
Legal guidelines that allow a minority shareholder to sue or take legal action on behalf of a corporation, typically to redress harm done to the company.
Relief-From-Oppression
Legal measures aimed at protecting individuals or groups from unfair or abusive treatment.
Director
A member of a company's board responsible for making major decisions and overseeing the organization's management.
- Comprehend the legal tools at shareholders' disposal for responding to breaches of duty and ensuring their interests within a corporation.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
D
Explanation :
Derivative-action provisions allow shareholders to sue on behalf of the corporation when the board of directors fails to take action against wrongdoing that harms the corporation. This would directly address the issue of the director's breach of duties and the board's refusal to act.
Learning Objectives
- Comprehend the legal tools at shareholders' disposal for responding to breaches of duty and ensuring their interests within a corporation.