John Hollin was an officer,director,and employee of a large broadly held corporation.At a directors meeting,he learned that the corporation was voting on a resolution to buy a piece of property from Sam Keanu for $100 000.It so happens that Hollin is one of three co-owners of that property.Hollin voted for the purchase and the resolution passed without discussion by a vote of 5-0.Several months after completion of the purchase,the other directors learned of Hollin's ownership and called on him to account to the corporation for any profit made.Which of the following is false?
A)Hollin should have disclosed his interest and refrained from voting or otherwise influencing the decision.
B)Hollin owed a fiduciary duty to the corporation and breached that duty by his actions.
C)Hollin must account for any profit made because he failed to disclose his interest and voted on the question.
D)If the directors failed to take action,the shareholders could have brought an action on behalf of the corporation against Hollin.
E)The shareholders could proceed under the dissent procedure and force the corporation to buy them out.

Question

Quizplus · Accepted Answer

Hollin's failure to disclose his interest and voting on the transaction where he had a conflict of interest breaches his fiduciary duty to the corporation. Shareholders could potentially bring a derivative action against Hollin for this breach. However, the dissent procedure typically applies to situations where shareholders disagree with certain corporate actions and wish to exit the corporation, not as a remedy for a director's breach of fiduciary duty.

John Hollin Was an Officer,director,and Employee of a Large Broadly