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) 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.
C) The shareholder could proceed under the dissent procedure and force the corporation to pay them a fair market value for their shares.
D) A derivative action allows a shareholder to commence an action on behalf of the corporation.
E) The shareholders could sue the corporation for oppression.

Question

Quizplus · Accepted Answer

A derivative action enables a shareholder to sue on behalf of the corporation when the corporation's directors fail to take action against wrongdoing that has harmed the corporation.

If a Corporation Had Been Wronged by Negligent and Fraudulent