7.) Abner owned a majority of the stock of Lum Company and he ran the corporatio

Question

7.) Abner owned a majority of the stock of Lum Company and he ran the corporation by himself. Abner's brother and sister, who agreed to sell all their stock to him, owned the balance of the stock. At the time of the purchase, Abner was negotiating a sale of the company but he did not reveal this fact to his brother and sister. The sale of the company resulted in a great profit to Abner. The brother and sister brought suit to recover the difference. Should the brother and sister succeed? Why? iduals formed a corpora- The

Explanation / Answer

Answer:- Yes, brother and sisters will be succeeded in this case as being the shareholders, they are having the right on all the incomes and liabilities of the firm even if they are not actively involved in the operations of the firm. In this case, Abner was acting as a representative of rest of the shareholders and taking business decisions on behalf of them thus the sale of the company is an activity which is done during the shareholding of brother and sister. Thus the profit which is earned from the sales of the company will also have the share of rest of the shareholders.

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