Smith, Jones, and Brown incorporated XYZ Ltd. The three were sole shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the business, but they disliked his personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and employee and raised their own salaries as employees. They then voted Smith out as a director at the next shareholders' meeting. Which one of the following provisions would aid Smith?

A) Relief-from-oppression provisions
B) Pre-emptive right provisions
C) Indoor-management rule
D) Derivative-action provisions
E) Dissent procedures

Question

Romario Phipps · Accepted Answer

Final Answer : A, Explanation :  Relief-from-oppression provisions are designed to protect minority shareholders from actions by the majority shareholders or directors that are oppressive, unfairly prejudicial, or that unfairly disregard the interests of any shareholder. In this scenario, Smith, as a minority shareholder who has been removed as an officer, employee, and director in a manner that could be seen as oppressive or unfairly prejudicial, would benefit from such provisions.

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