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Week 4 Homework.docx - BU342 Business Law Commercial Week 4...

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BU342 Business Law – Commercial Week 4 Homework Chapter 31 4. Miles, a shareholder of a bank, made a request that this bank’s books and records be inspected to determine if any action had been taken that would result in a negative effect on the shareholders. The bank should have to honor his request because shareholders have the right to bring a derivative suit against the corporation in which they are a shareholder of. This right can be exercised by a shareholder when the officers of a corporation “have acted outside of their scope of authority, guilty of negligent conduct, or are engaging in fraudulent transactions that are injurious to the corporation itself.” Although this right is given to shareholders, it is sometimes difficult to prove such evidence. They must show that the managers and directors have refused to take action, even after the shareholders have done everything in their power to secure the actions of such managers and directors.
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