Question: Pomeroy Carnivals Co Inc PCC is a familyowned corporation that
Pomeroy Carnivals Co., Inc. (PCC), is a familyowned corporation that operates carnival rides at fairs and festivals. The founders of the business, Les and Clara Pomeroy, own 79 percent of the shares, and their three children own 21 percent. Les and Clara are the only members of the board of directors of PCC. Acting as directors of PCC, Les and Clara decide to sell 40 percent of its carnival rides and to reduce by 30 percent the number of fairs and festivals in which PCC will operate rides. The sale will result in a one-time cash infusion of $34,000,000, which Les and Clara plan to invest for PCC in commercial real estate. PCC's annual net income from carnivals will drop by $1,650,000, about 55 percent of current annual net income. The children want to sue PCC's board of directors to stop the sale of the carnival rides and the investment of the proceeds in real estate. What is the process by which the children will sue the directors? Can Les and Clara stop the suit?
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