Xena was the original shareholder and sole director of Aberdeen Consulting Ltd. She held 10 shares. The
Question:
Xena was the original shareholder and sole director of Aberdeen Consulting Ltd. She held 10 shares. The corporation was profitable, but it needed more capital to engage in new business projects. To raise capital, Xena issued 20 shares of Aberdeen to Raju for $1000 per share.
Upon reviewing the corporation's financial statements, Raju discovers that the corporation has a consulting contract with a company controlled by Xena. The contract fees are much higher than the usual market rate for consulting services and have substantially reduced the profits of the business. Raju decides that, at the next shareholders' meeting when Xena's term expires, he will elect himself as director, terminate the contract, and put the business of the corporation on a much stronger financial footing. Upon hearing of this plan, Xena, as director, issues herself an additional 20 shares. At the shareholders' meeting, much to Raju's surprise, Xena outvotes him, reelecting herself as director. Raju is outraged and certain that something must be done to remedy this terrible situation. Is there anything Raju can do?
CorporationA 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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Managing the Law The Legal Aspects of Doing Business
ISBN: 978-0133847154
5th edition
Authors: Mitchell McInnes, Ian R. Kerr, J. Anthony VanDuzer