Andrea agreed to form a corporation with two friends,but lay awake last night rethinking her decision.They agreed that they all wanted to be directors and officers and that they all would have signing authority with the bank from whom the corporation is borrowing the money.Nevertheless,Andrea began to review her assumptions.Which of the following is true?
A)When Andrea signs the promissory note at the bank on behalf of the corporation,she can just sign her own name; she will not be personally liable as long as she intended to sign on behalf of the corporation.
B)Andrea would be able to ask the court for "relief from oppression" if she disliked a decision passed by the majority of the directors.
C)Andrea would be able to bring an action on behalf of the company if one of the directors breached his or her fiduciary duty to the corporation and the other directors refused to do anything about it.
D)As a major shareholder,Andrea would be elected as a director every year even without such a provision in the shareholders' agreement.
E)As a shareholder,Andrea is free to compete with the company even if she is a director as well.

Question

Quizplus · Accepted Answer

C is correct because shareholders can bring a derivative action on behalf of the corporation if the directors breach their fiduciary duties and the corporation refuses to act. This allows shareholders to seek redress for wrongs done to the corporation that the directors themselves are unwilling or unable to address.

Andrea Agreed to Form a Corporation with Two Friends,but Lay