When the company™s right is violated,the shareholders, as the ultimate owner of company™s interests, will inevitablyreceive damage.
But as the company is the independent legal entity, theshareholders generally have no right to decide whether or not pursue the legalliability of infringer. Due to the separation of ownership from management, thecompany daily management power is mostly dominated by managers, directors andother senior management personnel (Arnold and Margaret referred to in thiscase). The shareholders, especially minority shareholders, are weak for thesupervision of the company.
When infringers are third one, who have nothing todo with the company, the decisions made by the board are usually reasonable,however, when the infringers are members of the board, senior staff who controlthe company (Beta), the interests of the minority shareholders usually sufferfrom damage Derivative Actions byShareholders, entitled by Federal Rule of Civil Procedure 23.1, states that aplaintiff have to be a shareholder or member at the time of the transaction inorder to bring a derivative suit.
Besides, under New York Business CorporationLaw ?§?626(b), in this case, Arnold, as one of the directors and the majorityshareholder of Beta, who held 85 shares of common stock out of a total of 100shares issued and outstanding, infringed the company™s interests for his owngood without the other director Tom™ admission. Therefore, the minorityshareholder Diana, has the possibility to prevail against Arnold. The courtshould forbid Arnold™s order about purchasing the real estate from theCommercial Property and warn Arnold with an appropriate economic punishments.-w >
