Alex is a director of ABC,Inc.Alex wants to personally make a major purchase from Bravo Co.If it knew of the opportunity,ABC also might be interested in making that same purchase.Alex must
A)advise the boards of both corporations of his conflict of interest.
B)first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders.
C)resign from the board of directors.
D)abandon the idea of making the purchase himself.

Question

Quizplus · Accepted Answer

As a director of ABC, Inc., Alex has a duty of loyalty to the corporation and its shareholders. Therefore, he must first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders before making the purchase personally. This ensures that ABC has an opportunity to take advantage of the opportunity if it chooses to do so. If ABC is not interested, then Alex may make the purchase personally. However, if he chooses to make the purchase himself, Alex must still advise the boards of both corporations of his conflict of interest. Resignation from the board of directors or abandoning the idea of making the purchase himself may not be necessary if the proper steps are taken to avoid any appearance of impropriety.

Alex Is a Director of ABC,Inc