Grandiose secured an option to purchase a tract of land for $100,000. He then or

Question

Grandiose secured an option to purchase a tract of land for $100,000. He then organized Dunbar Corporation and subscribed to 51% of the shares of stock of the corporation for $100,000, which was issued to him in exchange for his 3-month promissory note for $100,000. Controlling the board of directors through his share ownership, he had the corporation authorize the purchase of the land from him for $200,000. He made no disclosure to the board or to other shareholders that he was making a $100,000 profit. He promptly paid the corporation for his shares and redeemed his promissory note. A disgruntled shareholder subsequently learned the full details of the transaction and brought suit against Grandiose on the corporation's behalf. Which of the following is a correct statement?
A: Grandiose breached his fiduciary duty to the corporation and must account for the profit he made.
B: The judgment of the board of directors was conclusive under the circumstances.
C: Grandiose is entitled to retain the profit since he controlled the corporation as a result of his share ownership.
D: Both A and C are correct.

Explanation / Answer

I believe it's A.

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