Problem
Make sure to include and label the Issue, Rule, Application of the Rule and the Conclusion for each question.
Glen is a director and shareholder of Eagle Corporation and of Fine Products, Inc. A resolution comes before the Eagle board to compete with Fine Products. What is Glen's responsibility?
a) Todd is a director and officer of United Sales, Inc. Todd makes a marketing decision that results in a dramatic decrease in profits for United and its shareholders. The shareholders accuse Todd of breaching his fiduciary duty to the corporation. What is Todd's best defense against this accusation? Later, a resolution comes before the United board to compete with VeriFine Products, Inc. Todd is a director and shareholder of VeriFine. What is Todd's responsibility in this situation?
b) Drew is an officer of Energy Fuel, Inc. Drew knows that an Energy engineer recently developed a new, inexpensive method for converting hydrogen into fuel. Drew takes advantage of this information to buy Energy stock from Gert and, after the discovery is announced, to sell the stock to Holly at a profit. Gert claims that this is a violation of federal law. Is Gert correct? If so, what federal law has Drew violated? If not, has Drew violated any law?
c) Standard Corporation is a public company whose shares are traded in public securities markets. Standard's officers want to set up and maintain a system of "good corporate governance." What is "corporate governance"? What is its practical significance? What, at a minimum, should a "good" system of corporate governance include?