Juana owned 13 shares of the Vermilion Mining Co. Three other shareholders held four shares each. The remainder of the 2,400 shares of capital stock was held by the three directors of the company. The company owned certain mining claims on which some preliminary exploration work had been done, but that required the investment of a large amount of capital in order to establish a mine. Because the com- pany had not been in a position to proceed with the development of the properties, the company faced the prospect in the near future of forfeiture of the mining claims as a result of their forced inaction.

The directors, who were shareholders in another mining company, entered into an agreement to sell the mining claims to that company in exchange for shares in the second company. The share exchange for the mining claims would give Vermilion a 10 percent interest in the other company. A meeting of shareholders was called to approve the transaction. At that time the directors declared their interest in the other mining company. The direc- tors explained that, in their opinion, the transfer represented fair market value for the claims and they urged approval of the transaction. The directors voted in favour of the sale over the objections of Juana, who was the only dissenting shareholder.

She accused the directors of attempting to confer a benefit on a company in which they had an interest, to the detriment of the company in which they were directors. She eventually brought an action to restrain the directors from completing the sale of the mining claims to the other company.

Discuss the issues raised in this case and render a decision.

the intent