Business Law

Business

Quiz 35 :
Shareholder Rights

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Quiz 35 :
Shareholder Rights

Demand of shareholders on board: The court excused demand, because the complaint alleged " misconduct of such occurrence and magnitude, undertaken in the face of the board express undertakings to monitor directly and prevent such misconduct. This interference of deliberate disregard by each and every member of the board was entirely reasonable ". In short, the board was so careless in exercising its responsibilities that demand would be ineffective.

There are many sporting events that are held around the world. Many athletes participate in these sporting events. The athletes either represent a franchise or they represent their countries while participating in these sporting events. Athletes are paid salaries as per the contracts signed by them with the respective federations or associations or boards that controls the events related with that particular sports. Generally all athletes are paid an amount based on the performances delivered by these athletes in the sporting event. The athletes are grouped in categories based on the performances delivered by them over the years. Not many athletes are paid much higher as compared to other employees and the salary ranges of all the athletes that are provided by the boards remain almost same for all the athletes. It is the prize money of the athletes that makes the salaries of the athletes to differ. On the other hand the executives work in different corporations, associations and nonprofit organizations. These executives earn salaries that are based on their experiences and the values that they bring into the organizations. These executives are also paid bonuses in case the company is able to achieve the requisite goal and is profitable in its business. The executives are generally paid much higher than other employees of the organization. The executives are paid higher salaries in order to retain them from moving on to other organizations. These top level executives are always in great demand and many companies are often ready to pay them higher amount in order to poach them from the rival firms. The money earned by the athletes on the other hand also depends upon the sponsorship that the athletes earn. The sponsorship deals of the athletes are generally very high and vary from player to player and generally depend on the popularity of the player. The executives of an organization generally are offered retirement as well as other benefits that are often not available to many athletes. Thus, above given are some of the differences between the salaries earned by executives and athletes around the world.

Shareholders are the legal owners of a limited company. They become partial owner of a company by buying shares of that company. As a result they have certain rights but they do not control the day today activities of the company. Shareholders possess the right to elect and remove directors from the board. They do not have the right to elect and remove an executive. At the same time the shareholders have the right to approve changes that are core to the business activities of the company. Thus, the shareholders can make choices related with the selling of a part of the company that is unprofitable. Thus, in the present case the shareholders do not possess the right to reinstate the CEO of the company and at the same time they possess the right to sell the unprofitable part of the business. Hence, the correct answer is option ( c ).

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