Mike Jones had been living at the same address in Springfield, California, for more than 30 years when he discovered that his water was emitting a strong odor. When he brought this observation to the attention of many of his neighbors, they complained of a similar odor. After some investigating, Mike discovered that a large corporation, the hypothetical Springfield Gas & Electric, had been dumping chromium 6, a possible carcinogen, into the water supply for decades. Mike then went to a lawyer with this discovery. The lawyer then filed suit against Springfield Gas & Electric in the name of the nearly 1,000 residents in Springfield with contaminated water.

Suppose after hearing about the scandal the shareholders are upset with the actions of the corporate officers and wish to sell their shares in the company. Can they?

Multiple Choice

No, this is an example of an S corporation.

It depends on how huge of an error the corporate officers made.

Yes, with corporations there is the free transfer of corporate shares.

No, shareholders cannot sell their shares. No, the company is closely owned.

No, the company is closely owned.