Lars Was the Director of a Corporation That Operated as a Travel

Lars was the director of a corporation that operated as a travel agency. The industry was subject to government regulations and the maintenance of trust funds on behalf of travelers who paid for their tickets. Lars left the operation of the corporation to the officers and never informed himself of the obligations which the corporation had within the travel industry. Consequently, it came as a surprise to him when the corporation's licence to operate as a travel agency was suspended for non-compliance with government regulations. The corporation had to shut down its business, and faced severe penalties from the government for non-compliance. Which of the following is TRUE?

A) The shareholders could successfully sue Lars in tort for breaching his duty to exercise the skill of a reasonable person.
B) The shareholders could successfully sue Lars for breach of his fiduciary duty to act honestly and in good faith.
C) The shareholders' only remedy is to have Lars removed as a director of the corporation.
D) The shareholders have no remedy against Lars, only against the officers of the corporation who did not comply with the government regulations
E) Both A and B