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 derivative action provision allows shareholders to bring legal action on behalf of the corporation against a director who has caused harm to the corporation, such as intercepting a corporate opportunity for personal benefit. In this case, the shareholder can bring a derivative action against Smith for causing the corporation to miss out on a $45,000 profit. The other provisions (pre-emptive right, indoor-management rule, dissent procedure, and relief-from-oppression provision) do not directly apply to the situation described.