R.A. Yancey Lumber Corporation owned a sawmill in Yancey Mills, Virginia, as well as 2,500 acres of land from which it sold timber. Dick Yancey, Dan Yancey, and Sarah May were the firm’s directors. Dick, Dan, their spouses, Sarah, and Sarah’s ex-husband, Bill, were the shareholders. Sarah and Bill owned a fraction more than one-third of the total shares. Together, Dick, Dan, and their spouses owned slightly less than two-thirds. A Virginia state statute requires that, if a sale of assets would leave a corporation without a “significant continuing business activity,” the sale must be authorized by more than twothirds of the shareholders. Dick and Dan wanted to sell the mill, but Sarah did not. Dick, Dan, and their spouses then voted to amend the corporate bylaws to provide “the Timber Business alone . . . shall constitute a significant continuing business activity.” Sarah filed a complaint in a Virginia state court, arguing that the amended bylaw was “null and void.” [May v. R.A. Yancey Lumber Corp., 822 S.E.2d 358 (Va. 2019)] (See Purchase of Assets.) 

(a) Apply the IDDR approach to evaluate the ethics of Dick and Dan’s decision to amend the bylaws to overcome Sarah’s opposition to a sale of the mill. 

(b) Suppose that after amending the bylaws, Dick and Dan entered negotiations to sell the mill to a third party buyer. On learning of Sarah’s objection to a sale, what should the potential buyer do? Discuss.