Horton owned 112 shares of common stock in Compaq Computer Corporation (Compaq), a Delaware corporation. Horton and

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Horton owned 112 shares of common stock in Compaq Computer Corporation (Compaq), a Delaware corporation. Horton and seventy-eight other parties sued Compaq, fifteen of its advisers, and certain management personnel, alleging that Compaq and its codefendants had
(1) Violated the Texas Security Act and the Texas Deceptive Trade Practices Consumer Protection Act and
(2) Committed fraud and breaching their fiduciary duty. All these claims arise from the contention that Compaq misled the public regarding the true value of its stock at a time when members of management were selling their own shares. Horton delivered a letter demanding to inspect Compaq's stock ledger and related information. The demand letter stated that the purpose of the request was to enable Horton to communicate with other Compaq shareholders to inform them of the pending shareholders' suit and to ascertain whether any of them would desire to become associated with that suit or bring similar actions against Compaq and assume a pro rata share of the litigation expenses. Compaq refused the demand, stating that the purpose described in the letter was not a "proper purpose" for inspecting corporate books and records. Explain who should prevail and why?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Smith and Robersons Business Law

ISBN: 978-1337094757

17th edition

Authors: Richard A. Mann, Barry S. Roberts

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