A director is considering buying a car for the corporation from a car dealership that is owned by his brother. To be absolutely safe, what should the director do before making the purchase?
A) nothing, the corporation will be paying full price for the car, and the brother is not making any concession for the director
B) disclose the director's relationship with the seller, and have the purchase approved by the shareholders
C) disclose the director's relationship with the seller, and have the purchase approved by the independent directors on the board
D) have his brother make a statutory declaration that the car was sold at fair market value

Question

Quizplus · Accepted Answer

Approval by the board of directors may be sufficient, but approval by an appropriate majority of shareholders is unassailable.

A Director Is Considering Buying a Car for the Corporation