Law Commons^™

Corporations - Shareholders - Power Of The Majority To Ratify Director's Fraud, Paul A. Heinen

Michigan Law Review

Plaintiff, a stockholder in the Kroger Company, brought a derivative suit against a subsidiary of the company and certain officers and directors of both the parent and the subsidiary. It was alleged that . Kroger's directors had fraudulently waived the company's preemptive right to a new issue of stock of the subsidiary and had then purchased the shares for their own accounts at a price far below the market value. The defendants answered that the sale had been ratified by a majority in interest of disinterested stockholders to whom all the details of the transaction had been explained, and denied …