Asked by Joshua Freeman on Jul 04, 2024
Verified
Michelyn is a director in Zemp Corporation. She has been quietly taking product home and selling it on the black market. The other directors of Zemp Corporation know about Michelyn's actions but fail to take corrective action. Zellen, a shareholder finds out and comes to you asking you what to do. What do you tell Zellen?
A) That Zellen has no recourse because the other officers must bring the suit against Michelyn.
B) Zellen should initiate a shareholder's derivative suit.
C) Zellen should initiate a shareholder's direct suit.
D) Zellen should seek help from the Secretary of State.
E) Zellen should bring a personal suit against Michelyn alleged wrong doing.
Shareholder's Derivative Suit
A legal action brought by shareholders on behalf of a corporation to enforce or defend its rights when the corporation's management fails to do so.
Black Market
An illegal trade of goods or services that violates governmental regulations, often to avoid taxes or because the goods are prohibited.
- Assess legal foundations and defenses pertinent to corporate governance, highlighting the business judgment rule.
Verified Answer
SC
Sydoney ClarkeJul 05, 2024
Final Answer :
B
Explanation :
Zellen should initiate a shareholder's derivative suit because this type of lawsuit allows a shareholder to sue on behalf of the corporation when the directors fail to take action against wrongdoing that affects the corporation.
Learning Objectives
- Assess legal foundations and defenses pertinent to corporate governance, highlighting the business judgment rule.