X, a stockholder, was denied a pre-emptive right and the right to vote in TVW Corporation’s actions. Which actions may X file against TVW Corporation?

X, a stockholder, was denied a pre-emptive right and the right to vote in TVW Corporation’s actions. Which actions may X file against TVW Corporation?

• A. Derivative suit for pre-emptive right and right to vote
• B. Representative suit for pre-emptive right and right to vote
• C. Representative suit for pre-emptive right, and individual suit for right to vote
• D. Individual suit for pre-emptive right, and representative suit for right to vote

Answer: (D)

The key idea is distinguishing personal shareholder rights from actions that harm the corporation and thus require different remedies. Pre-emptive rights are a personal entitlement of a stockholder to subscribe to new shares so as to maintain ownership percentage. When those rights are denied, the injured party is the individual stockholder, so the proper remedy is an individual action to enforce that personal right. The right to vote is also a shareholder right, but if the denial or manipulation affects the voting of shareholders as a group, the appropriate remedy is a representative action that protects the class of shareholders who were deprived of their voting rights. This is different from a derivative suit, which is used when the corporation itself has been harmed and the suit seeks to protect the corporation’s interests. So, for X: File an individual suit to enforce the pre-emptive right, and a representative (class) suit to protect the voting rights of the shareholders. This is why the described combination fits best.

The key idea is distinguishing personal shareholder rights from actions that harm the corporation and thus require different remedies. Pre-emptive rights are a personal entitlement of a stockholder to subscribe to new shares so as to maintain ownership percentage. When those rights are denied, the injured party is the individual stockholder, so the proper remedy is an individual action to enforce that personal right.

The right to vote is also a shareholder right, but if the denial or manipulation affects the voting of shareholders as a group, the appropriate remedy is a representative action that protects the class of shareholders who were deprived of their voting rights. This is different from a derivative suit, which is used when the corporation itself has been harmed and the suit seeks to protect the corporation’s interests.

So, for X: File an individual suit to enforce the pre-emptive right, and a representative (class) suit to protect the voting rights of the shareholders. This is why the described combination fits best.