Bar Exam (US) Corporations: Question below is based on the following fact situation. Happy Holid...

Question

Question below is based on the following fact situation.

Happy Holiday Corp. ("HHC") is a corporation in the state of Vacationland. Its primary corporate purpose is selling vacation properties (e.g., condos, time shares) in Vacationland. Vacationland is a popular vacation destination for couples, families, and college students. It is a prime location because it has beautiful beaches on the coast and rugged mountains inland. Visitors can ski in the winter and surf in the summer. For this reason, HHC is extremely successful.

HHC has a seven-member board of directors and numerous shareholders. Horatio Holiday, HHC's founder, owns the majority of HHC's shares. The remainder of the shares are divided among officers and directors and shareholders who have bought shares through a national stock exchange.

Assume for the purposes of this question only that Horatio Holiday demands the resignation of the current directors and makes plans unilaterally to appoint new ones. The other shareholders protest vehemently, saying that they have the right to elect the directors. Horatio smugly tells them that they are full of hot air. Who is correct?

AnswerChoose the correct answer.Choose all that apply. Correct Partially correct Incorrect Don't Know

  1. A
    Correct Answer
    The other shareholders, because they have the right to elect the directors.
  2. B
    Correct Answer
    The other shareholders, because otherwise Horatio would run the company.
  3. C
    Correct Answer
    Horatio, because he owns a controlling interest in the company.
  4. D
    Correct Answer
    None of the above.
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