For which of the following would a shareholder derivative action be appropriate?
A)The shareholder alleges that the CEO wrongfully diverted corporate assets to his personal use.
B)The shareholder has been refused a request that his/her accountant be permitted to look at the corporate accounting records.
C)The shareholder alleges that the corporation has violated the shareholder's preemptive right.
D)The shareholder alleges that the corporation has been paying dividends to a previous shareholder from whom the shareholder purchased his/her shares.

Question

Quizplus · Accepted Answer

One or more shareholders are permitted under certain circumstances to bring an action for the benefit of the corporation when the directors have failed to pursue a corporate cause of action.For example,if the corporation has a claim against its chief executive for wrongfully diverting corporate assets to her personal use,the corporation may not sue the chief executive because she controls the board of directors.Clearly,the CEO should not go unpunished.Consequently,corporation law authorizes a shareholder to bring a derivative action against the CEO on behalf of the corporation and for its benefit.

For Which of the Following Would a Shareholder Derivative Action