It may be a violation of a duty of loyalty or a closely held corporation's duty of good faith to fellow shareholders to force this addition of paid in capital in order to prevent a massive redistribution of wealth to new underpaying shareholders. There may not be a valid business reason for the decision because the facts state that the corporation does not need the additional paid in capital. Well is a closely held corporation whose stock is not publicly traded and is held by a small group of people who also run the business. Answer to Question Six 1. The issue is whether a director owes a duty of loyalty to not usurp a corporate opportunity.
Directors owe a fiduciary duty of loyalty to the corporation.
The director must act in good faith with that degree of morality, conscientiousness, honesty and fairness that the law requires of fiduciaries. A corporate opportunity is one which the corporation has indicated an interest in or is in need of. Inc. Since its opening in 1990, Eat Well, Inc. has proved to be popular and profitable. There is no question that Eat Well has an interest in another quality restaurant that is near Eat Well. However, at the Eat Well board of directors meeting in 1998, Bill informed the other directors that shares of Gourmet Corp. were for sale at an attractive price and on terms that Eat Well could afford.