Case summary: Person DB was a director in company FBF which owned a string of fitness club in Mexico. DB owned 15 percent of the total stock in the company and was also working as a tanning technician at one of the fitness clubs. According to the finance report, company FBF was facing financial loss. Person ML discussed terminating the tanning operation. Person DP who was one of shareholders disclosed that person DB owned stock in the company S from which FBF purchased the tanning equipment. DB and MV owning 37 percent of FBF and also holding shares of company S, voted to replace ML from the board of directors.
To find: The duty of person DB as a director to company FBF
Explanation of Solution
Person DB owes ethical and legal duties as a director of company FBF. Person DB is in a fiduciary relationship to corporations and it is his duty to remain loyal and to act in good faith to the company.
In the above case, person DB owes a duty to disclose to company FBF about his shares in company S from where FBF purchases its tanning equipment. The directors are considered to be fiduciaries of the company and as a director they owe to the company the duty of loyalty, the duty of trust, and duty of care. It is expected from the directors that they will show a high care, diligence or skill, and will act in good faith for the development of the company. The directors will try to avoid conflict of interest. The relationship between the company and the directors is one kind of trust.
Want to see more full solutions like this?
Chapter 18 Solutions
The Legal Environment of Business: Text and Cases (MindTap Course List)
- The digits of the account numbers assigned to general ledger accounts often have significance. For example, an account number beginning with a "1" might signify that the account is an asset account, a "6" might signify an operating expense, etc. True Falsearrow_forwardKlassen Toy Company, Inc., assembles two parts (parts 1 and 2): Part 1 is first processed at workstation A for 10 minutes per unit and then processed at workstation B for 20 minutes per unit. Part 2 is simultaneously processed at workstation C for 12 minutes per unit. Work stations B and C feed the parts to an assembler at workstation D, where the two parts are assembled. The time at workstation D is 15 minutes. a) The bottleneck of this process is at minutes per unit (enter your response as a whole number).arrow_forwardEvery transaction will affect how many accounts? Only One Only Two Two Or Morearrow_forward
- In addition to the standard chart of accounts for a specific industry, you will likely want to expand and/or modify the chart of accounts to fit your business. One tool that would be helpful in determining the accounts for your company would be your company's __________ chart.arrow_forwardThe chart of accounts is a listing of the accounts presently having balances in the general ledger. True Falsearrow_forwardAnswer for #2 and #3 cannot be the following:1100012748.14146928250561093509985arrow_forward
- if the car coast $28,000 and the intrest rates is 12% and term of payment is for six (6) years. how much would it coast you to buy this car?arrow_forwardThe listing of all of the accounts available for use in a company's accounting system is known as the __________.arrow_forwardJust HELParrow_forward
- Unearned Revenues is what type of account? Asset Liability Stockholders' (Owner's) Equityarrow_forwardFind the person's adjusted gross income using the followining data Income from Jobs Interest Misc. Income Dividend Income Adjustments to Income Adjusted Gross Income $23 comma 250 $326 $2547 $62 $2049 $ enter your response herearrow_forwardPlease see an attachment for details general accounting questionarrow_forward
BUSN 11 Introduction to Business Student EditionBusinessISBN:9781337407137Author:KellyPublisher:Cengage Learning
Essentials of Business Communication (MindTap Cou...BusinessISBN:9781337386494Author:Mary Ellen Guffey, Dana LoewyPublisher:Cengage Learning
Accounting Information Systems (14th Edition)BusinessISBN:9780134474021Author:Marshall B. Romney, Paul J. SteinbartPublisher:PEARSON
International Business: Competing in the Global M...BusinessISBN:9781259929441Author:Charles W. L. Hill Dr, G. Tomas M. HultPublisher:McGraw-Hill Education