If Eilene, a shareholder, sues in a derivative suit, the judgment will be paid to:
A) the board of directors.
B) the shareholders as a dividend.
C) Eilene directly.
D) the corporate treasury.

Question

Quizplus · Accepted Answer

In a derivative suit, any judgment awarded is paid to the corporate treasury, not directly to the shareholder who initiated the suit, the board of directors, or distributed to the shareholders as a dividend. This is because the lawsuit is brought on behalf of the corporation for harm done to the corporation, not to the individual shareholder.

If Eilene, a Shareholder, Sues in a Derivative Suit, the Judgment