Chapter 18, Problem 3RE

Summary Introduction

Case summary: Person DB was a director in company FBF which owned a string of fitness clubs in Mexico. DB owned 15 percent of the total stock of 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 company FBF purchased required tanning equipment. DB and MV owning 37 percent of FBF and also holding shares of the company S, voted to replace ML from the board of directors.

To find: The theory that will be used by person DB as his defense.