A controlling shareholder has a duty not to transfer the power of management to a purchaser the shareholder knows or has reason to believe will use that power to the detriment of the corporation.

Question

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This is known as the duty of loyalty, which states that controlling shareholders must act in the best interest of the corporation and not in their own personal interest. Transferring power to a purchaser who will harm the corporation violates this duty.

A Controlling Shareholder Has a Duty Not to Transfer the Power