Moe, Curly and Larry founded the Three Rodneys Inc., a corporation with its location in Hollywood,...
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Moe, Curly and Larry founded the "Three Rodneys Inc.", a corporation with its location in Hollywood, CA. The corporation is a close corporation and the stock structure is as follows: Moe owns 200 shares, Curley owns 200 shares and Larry owns 100 shares. The corporation is in the business of supplying movie studios with antique cars for films. Each of the shareholders is also a director and officer of the corporation. The corporation is immediately successful. Even in its first year, it posts significant profits. Yet, the directors vote not to grant dividends. Curley votes in favor of a dividend, believing it is required by law but is outvoted by the other directors and shareholders. Since he is also a shareholder, he then sues the other directors for breach of their fiduciary duty. Will he be successful? A. No, because issuing dividends is a discretionary act of the Board. B. No, because a minority director does not have the right to seek a dividend. C. Yes, because dividends must be issued when the corporation posts profits. D. Yes, because any director on the Board of Directors has the authority to compel the board to issue dividends. Moe, Curly and Larry founded the "Three Rodneys Inc.", a corporation with its location in Hollywood, CA. The corporation is a close corporation and the stock structure is as follows: Moe owns 200 shares, Curley owns 200 shares and Larry owns 100 shares. The corporation is in the business of supplying movie studios with antique cars for films. Each of the shareholders is also a director and officer of the corporation. The corporation is immediately successful. Even in its first year, it posts significant profits. Yet, the directors vote not to grant dividends. Curley votes in favor of a dividend, believing it is required by law but is outvoted by the other directors and shareholders. Since he is also a shareholder, he then sues the other directors for breach of their fiduciary duty. Will he be successful? A. No, because issuing dividends is a discretionary act of the Board. B. No, because a minority director does not have the right to seek a dividend. C. Yes, because dividends must be issued when the corporation posts profits. D. Yes, because any director on the Board of Directors has the authority to compel the board to issue dividends.
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Related Book For
Taxation For Decision Makers 2014
ISBN: 9781118654545
6th Edition
Authors: Shirley Dennis Escoffier, Karen Fortin
Posted Date:
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