Smith, director of ABC Ltd., intercepted a corporate opportunity for his own benefit and thereby caused the corporation to miss a $45 000 profit.A shareholder urged the board of directors to take action against him.The other directors, all close friends of Smith from school days, did not take any action against him, although they did voice their dissatisfaction with his move.Which of the following provisions would aid the shareholder?

Question

Quizplus · Accepted Answer

The representative action (derivative-action) provision allows shareholders to take legal action on behalf of the corporation against a director who has acted against the best interests of the corporation. In this case, Smith's interception of a corporate opportunity for his own benefit resulted in the corporation missing out on a $45 000 profit. Therefore, a shareholder could potentially bring a derivative action against Smith for breaching his duties as a director. The other options are not applicable in this scenario.

Smith, Director of ABC Ltd