Albert is a director and the majority shareholder of burien


Albert is a director and the majority shareholder of Burien Widgets Corporation. Albert buys, for $2,500, an option to purchase a tract of real estate for $70,000. Albert forms a new corporation, Albert’s Investments, Inc., to hold the option. As the majority shareholder, and thus controlling director, of Burien Widgets, Albert orders Burien Widgets to authorize the pur­chase of the land from Albert’s Investments for $500,000. Albert then has Albert’s Investments buy the land and sell it to Burien Widgets, and loan the money to Burien Widgets for the purchase at a 20 percent interest rate. Donald, a minority shareholder in Burien Widgets, complains to Burien’s board, which takes no action. Donald files a suit against Albert on Burien Widget’s behalf. Will Donald prevail? Please fully explain your answer and support it with at least one example. You must provide an example to receive all the possible points for this question.

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Operation Management: Albert is a director and the majority shareholder of burien
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