The Case of the Director Who Wore Too Many Hats
The Case of the Director Who Wore Too Many Hats
Maria is one of 5 directors of Beta Investments Corporation. She is also a majority shareholder holding both common and preferred stock. Her stock with voting rights amounts to 47% of all stock issued with voting rights.
Maria buys, for $1,500, an option to purchase a tract of real estate called Blackacre, which is next to Beta’s home office, for $50,000. Maria forms a new corporation, Commercial Property, Inc., to hold the option. She then has Commercial Property buy Blackacre. As a director of Beta, Maria orders Beta to authorize its real estate agent to negotiate the purchase of the land from Commercial Property for $100,000. After a successful negotiation for the purchase of Blackacre for $100,000, Maria has Commercial Property sell it to Beta, and loan the money to Beta for the purchase price at a 5% interest rate which is 2% below the market rate. Lakesha, a minority shareholder in Beta, formally complains to Beta’s board which takes no action.
The Trial
Lakesha files a suit against Maria on Beta’s behalf seeking to cancel the sale. Maria asks the Court to dismiss the lawsuit as Lakesha has no standing to bring the lawsuit.
Arguments At Trial
Maria’s attorney argues that Blackacre is necessary for Beta as it will allow them to expand their offices and production plant thus increasing the net worth and potential profits to the shareholders. Further, the Board of Directors of Beta authorized the purchase which appeared to be in accordance with the Articles of Incorporation.
Lakesha’s attorney argues that the purchase of Blackacre should have been put to a vote of the shareholders of Beta as required by Beta’s Bylaws. Beta’s Board of Directors failed in its duty to make sure this sale was in the corporation’s best interest.
Questions to Decide
What kind of suit will Lakesha file and what is its basis?
Who are the Plaintiffs and who are the Defendants? Why?
What are the defenses, if any, of Beta or Maria?
Who will win the case and why?
Hello again,
Thanks for taking my discussion assignment here are some more instruction please follow them.
In the semester there will be posted in the Discussions a fact scenario that relates to the material in the textbook and additional readings. A series of questions will be posted with this scenario. Each student who participates in this discussion can receive up to 15 points per scenario for the answers and 5 points for the response.
Participation is defined as posting one’s comments or answers to the questions in the assigned forum and responding in any forum. Have a discussion please. If you wish to respond in a different forum, you’ll first have to post a short introduction and then you can see the threads in that forum.
“Yes” or “No” or “I agree” is not an answer nor is it a response. I’m looking for developed answers that include an analysis of the scenario in relationship to the content of the reading materials. A response is a comment to someone so please indicate whose post you are responding to and develop your answer. I don’t know the context for your response if I don’t know who, by name, you are responding to. The statement, “I agree with you”, doesn’t tell me who you are responding to as all I see is a string of names.
The following is from a student who posted a long response but really didn’t say anything: “I agree with all of the examples and such that you gave. The examples you gave from the book are very good and are actually substantial. I agree with your viewpoints as well. I would be in favor of xyz in this situation as well for the reasons you had said and other reasons listed in my post. Overall, great post! Keep up the good work!” What did this student say besides “I agree with you”?
There must be at least one reference to chapter/page/additional reading in a student’s discussion. If a student chooses not to participate, no points will be received. Minimal participation will yield partial points.
You may find that some student(s) who posted prior to you may have covered the points you wanted to cover. Explore the material to see if there isn’t something additional to add or a new perspective. Perhaps you can explore the “opposition” side. I’m looking for analysis using the scenario facts and the materials in the readings – there is no right or wrong answer – it’s how you discuss and support your position that’s critical. That means some legal theory for your answer must appear. However, an incorrect application of the material, e.g., a tort concept in a breach of contract action without adequate support will result in some point deductions.
Remember, there are always different ways of looking at things – You say goodbye and I say hello. There is a certain amount of vagueness in the facts of each scenario to allow for different perspectives.
Students will be divided into groups according to the first letters of their last names. (Jury 1 A-C for example). Each group will be assigned a different scenario. Please monitor Canvas’s Discussion to see which Scenario/Group you have been assigned to. While a response can be posted in any forum following the directions above, the initial post must be submitted in the assigned forum.
All forums are deliberately kept to a maximum of 5 members in order to allow each member enough new material to discuss. If the forum gets to large because students outside the forum post to the initial questions, it robs the forum members of an opportunity to demonstrate their analytical skills.
If a non-forum member submits an initial post, not a response, in the incorrect forum, it will be treated as a response for purposes of grading and given no more than 2 points.
All discussions will be posted in the Discussions section. That is also where the Scenarios will be found. Each student’s analysis/discussion must also be posted in the Discussions.
When you respond to another’s post, please indicate the student(s) to whom you are responding. It can be difficult to follow your response if I don’t know the basis for that response. And please, remember to introduce yourself as a visitor to that forum as a matter of courtesy. This is important – you must create a new thread to introduce yourself before you can read the other students’ posts. You don’t need to do this in your own forum. In fact, do not do it. Creating a new thread in a forum to which you weren’t assigned and answering the scenario questions as though the answers are a response, won’t count as a 5 point response. That will result in a maximum of 2 points towards the 5 points for a response.
DO NOT prepare your answers as an attachment. I won’t open it to grade it and I don’t expect another student to open an attachment from someone they don’t know.
Spelling and grammar are a part of the grading and deductions will be taken if there are errors in these areas.
There are NO MAKEUPS for this assignment if missed. You will have a minimum of 4 days in which to complete the scenario to which you are assigned. I will not take these late because once the dates have passed, the class has moved on and the discussion is no longer taking place. Posting a late response will therefore not contribute to the class discussion, which is why they won’t be accepted.
You are required to create a thread and post something before being able to view the other students’ posts. I have observed that some students attempt to “scam” the forum by posting a sentence in their assigned forum as their initial answers. That enables them to view the other posts. Then they will be able to continue their answers in a second post having the benefit of seeing what others have written. If I believe you’ve done that, you’ll receive points only for the first post which is generally -0-
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