The After-School Care Corporation owned more than forty day-care centers specializing in providing care to elementary-school-aged children in the afternoons. The president of the company, Clark Holmes, received a phone call at work one day from Marney Stein, the owner and sole proprietor of Pro Providers, a firm that owned six nursery schools for children aged two to four. Stein indicated that she wanted to sell Pro Providers for $1 million and asked if After-School were interested. Holmes proposed the sale to the After-School board of directors. The directors were divided on the issue because they were not certain whether branching out into nursery care would be a smart move. As funds were not available, however, they saw no need to vote on the issue at that time.

Holmes decided that he would try to purchase Pro Providers on his own. After securing a loan, Holmes entered into negotiations with Stein. They agreed on a price of $900,000, and the sale went through. Holmes did not inform the board of his activity until after the sale was completed. A shareholder is considering suing Holmes. What theory would the shareholder use? Does she have a valid claim? Should it matter that Holmes plans to expand one of the Pro Provider nursery schools into a nursery/after-school center?