Similarly, if the company’s officers take a number of expensive steps that ultimately prevent a takeover attempt, then the shareholders who have to pay for these measures might feel that management’s arguably self-serving behavior was unethical. 6. Should courts intervene when minority members of an LLC (or minority shareholders of a corporation) receive what they believe to be unfair treatment at the hands of the majority members (or shareholders)? To protect the interests of minority owners, courts have shown an increasing willingness to allow minority corporate shareholders to sue majority shareholders directly for breach of fiduciary duties. Some courts have also ordered close corporations to purchase minority shareholders’ shares at fair value to resolve shareholder disputes. And at least two states have enacted statutes that provide for such buy-outs. This may indicate what a court would do in a similar case involving an LLC.
UNIT EIGHT: FOCUS ON ETHICS—BUSINESS ORGANIZATIONS 79 A CTIVITY AND R ESEARCH A SSIGNMENT Ask each student to prepare a brief report on a notorious incident involving insider trading. Special at- tention should be devoted to how the trading activities were carried out and ultimately detected, as well as the consequences that followed from the incident.
- Fall '09
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