Question

Connect Homework - Chapter 11 Saved Help Save & Exit Submit Exercise 11-2 Rights of stockholders LO C1 Indicate which activities of Stockton Corporation violated the rights of a stockholder who owned one share of common stock. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.) points eBook ? Did not allow the stockholder to sell the stock to her brother. Print 2 Did not allow the stockholder to make decisions regarding hiring and firing employees. References 2 Rejected the stockholder's request to vote via proxy because she was home sick. 2 When additional common stock was later issued, the company did not give the shareholder the preemptive right to protect her proportionate interest. 2 In liquidation, paid the common shareholder after all creditors were already paid.
I need help with the Explanation and Solution Please and Thank you.

Answer 1

1. Did not allow the stockholder to sell the stock to her brother : VIOLATION

Explanation: A stockholder cannot debarred from transferring its stock. If a company is not allowing its stockholder to transfer its interest in stock of the company, it will amount to violation of the rights of the stockholder.

2. Did not allow the stockholder to make decisions regarding hiring & firing employees : NOT VIOLATION

Explanation: Stockholder enjoys the ownership rights but the management responsibility lies with the directors. Stockholders have no right to take decisions regarding the regular operations of the business.

3. Rejected the stockholder's request to vote via proxy because she was home sick : VIOLATION

Explanation: To vote via proxy is the right given by the law to the stockholder. If a company rejects the stockholder's request to vote via proxy, it amounts to violation of the rights of the stockholder.

4. When additional common stock was later issued, the company did not give the shareholder the preemptive right to protect her proportionate interest : VIOLATION

Explanation: The most important rights that all common shareholders possess includes preemptive rights to newly issued shares; and general meeting voting rights. Hence, the specified condition will amount to violation of shareholder's rights

5. In liquidation, paid the common shareholder after all creditors were already paid : NOT VIOLATION

Explanation: Shareholders have the last right on the assets of the company in the event of liquidation. Hence, payment to creditors before paying to shareholder does not amount to violation of shareholder's right