Question 2: STANK & VISTA
A & B: Yes, Angel will prevail. Based on this scenario, neither Stank nor UNIC took any actions regarding the purchase of Greenacre from Vista Property, which Stank has personal interest in. According to Miller, directors and officers have the “Duty of Loyalty” which “requires directors and officers to subordinate their personal interests to the welfare of the corporation. For instance, a director should not oppose a transaction that is in the corporation’s best interest simply because pursuing it may cost the director his or her position. Directors cannot use corporate funds or confidential corporate information for personal advantage and must refrain from self-dealing” (Miller, 6-2c).
In addition to the “Duty of …show more content…
Did not have a conflict between her or his personal interest and the interest of the corporation” (Miller, 6-2b).
B. Most courts will only apply the ‘business judgment” rule unless there is evidence of bad faith, fraud, or a clear breach of fiduciary duty. Such as if Homer, intentionally tries to make the bad decision to decrease the result of the profit, didn’t exercise care that a prudent person would (acted in gross negligence), or did not do what was the best interest for the corporate.
Part B: Homer with the fiduciary duty of the corporation as a director and officer, he is responsible of making a full disclosure of this transaction because he is also a director and shareholder of One-of- a-Kind. According to Miller, “Corporate directors often have many business affiliations, and a director may sit on the board of more than one corporation. Of course, directors are precluded from entering into or supporting businesses that operate in direct competition with corporations on whose boards they serve. Their fiduciary duty requires them to make a full disclosure of any potential conflicts of interest that might arise in any corporate transaction [RMBCA 8.60]” (6-2d). In this full disclosure, it should include the nature of the interest and all facts related to the transaction. Homer must also abstain from voting on the proposed transaction. When these rules are followed, the transaction can proceed. Otherwise, directors would be prevented from ever having financial dealings with the corporations they serve (Miller,
A & B: Yes, Angel will prevail. Based on this scenario, neither Stank nor UNIC took any actions regarding the purchase of Greenacre from Vista Property, which Stank has personal interest in. According to Miller, directors and officers have the “Duty of Loyalty” which “requires directors and officers to subordinate their personal interests to the welfare of the corporation. For instance, a director should not oppose a transaction that is in the corporation’s best interest simply because pursuing it may cost the director his or her position. Directors cannot use corporate funds or confidential corporate information for personal advantage and must refrain from self-dealing” (Miller, 6-2c).
In addition to the “Duty of …show more content…
Did not have a conflict between her or his personal interest and the interest of the corporation” (Miller, 6-2b).
B. Most courts will only apply the ‘business judgment” rule unless there is evidence of bad faith, fraud, or a clear breach of fiduciary duty. Such as if Homer, intentionally tries to make the bad decision to decrease the result of the profit, didn’t exercise care that a prudent person would (acted in gross negligence), or did not do what was the best interest for the corporate.
Part B: Homer with the fiduciary duty of the corporation as a director and officer, he is responsible of making a full disclosure of this transaction because he is also a director and shareholder of One-of- a-Kind. According to Miller, “Corporate directors often have many business affiliations, and a director may sit on the board of more than one corporation. Of course, directors are precluded from entering into or supporting businesses that operate in direct competition with corporations on whose boards they serve. Their fiduciary duty requires them to make a full disclosure of any potential conflicts of interest that might arise in any corporate transaction [RMBCA 8.60]” (6-2d). In this full disclosure, it should include the nature of the interest and all facts related to the transaction. Homer must also abstain from voting on the proposed transaction. When these rules are followed, the transaction can proceed. Otherwise, directors would be prevented from ever having financial dealings with the corporations they serve (Miller,