Arthur is a shareholder of Rowson, Inc.He has evidence to suggest that its president/CEO has allowed the corporation to engage in acts that are ultra vires .Based upon this evidence, Arthur contacts an attorney and sues the corporation on behalf of the corporation.The lawsuit Arthur has filed is known as:
A) an unauthorized suit.
B) a direct suit.
C) a derivative suit.
D) a class action suit.

Question

Quizplus · Accepted Answer

Arthur's lawsuit is a derivative suit because he is suing on behalf of the corporation for actions that are beyond the scope of its powers (ultra vires), aiming to address wrongs done to the corporation itself.

Arthur Is a Shareholder of Rowson, Inc