Greg, Kim, Phil, and Bob each own 20 percent of the shares of a company and serve as the board of directors of the company, Home Health, Inc. George is also a 20 percent shareholder, but he is not a member of the board of directors. When Bob dies, his wife Suzie inherits his shares of stock that were then worth $100,000, and replaces him on the board. Unfortunately, she is so grief-stricken that she is completely inattentive to corporate affairs. During this period, Greg, Kim, and Phil extend loans to themselves totaling $250,000 from corporate funds that they never pay back. when George discovers that Home health, Inc. is insolvent, he sues Suzie for breach of her duty of care to the corporation. Discuss Suzie's liability. May Suzie assert the limited liability of the corporate form as a defense?
This is an interesting problem, however it is easier to answer than expected.
One cannot inherit a place on a Board of directors, it has to be assumed (sometimes by an approval vote of the shareholders or whatever process the corporate ...
Corporate Compliance is detailed.