Question

In: Operations Management

53. Hannah, a director of Ink, Inc. is involved in a litigation involving the corporation. In...

53. Hannah, a director of Ink, Inc. is involved in a litigation involving the corporation. In the course of litigation, she incurs court costs and attorney's fees. Hannah has a right to

  1. file a shareholders derivative suit.
  2. be reimbursed, or indemnified.
  3. access the corporation’s books, records, facilities, and other property.

54. Which of the following is a prerequisite to the incorporation of a business

  

  1. selecting the state of incorporation.
  2. deciding when to declare dividends.
  3. deciding whether to provide cumulative voting rights.

Solutions

Expert Solution

Answer 53: Option b) be reimbursed or indemnified.

Hannah, Director has a right to be reimbursed or indemnified for expenses incurred by her during the litigation involving the corporation. A director has right for full reimbursement of court and legal fee expenses incurred by him/her on behalf of corporation. She has right tobbe reimbursed if expenses paid are in relation with investigating, defending or being a witness or participating in any claim or litigation.

Answer 54: Option a) Selecting the state of incorporation.

Before Incorporating the company, a company needs to select the home state of incorporation. State of incorporation is very important because taxes, laws, cost vary from state to state, so a company should select first it's state of incorporation which is best for them and can serve as a home for its main office.

It is a prerequisite to the incorporation of a business.

Other options are wrong because decision of when to declare dividends and cumulative voting rights is taken after the company issues shares in the market which is way long after the incorporation of a company.


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