ABC Ltd. is a closely held corporation. Two of the shareholders serve as directors. As directors, they voted to issue themselves more shares to increase their voting control of the corporation. Which of the following provisions would aid the other shareholders?
A) Relief-from-oppression provisions
B) Pre-emptive right provisions
C) Derivative-action provisions
D) Dissent procedure
E) Indoor-management rule

Question

Quizplus · Accepted Answer

Pre-emptive right provisions allow existing shareholders the right to purchase additional shares before the company offers them to the public, thus helping to maintain their proportional ownership and control in the company. This would aid the other shareholders in preventing their dilution of control.

ABC Ltd Is a Closely Held Corporation