Is the marketing contract a directors conflicting

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Reference no: EM133638356

Corporations (Duty of Loyalty)

BACKGROUND FACTS: Assume a jurisdiction that has adopted the Model Business Corporations Act (2016) as its corporation's statute. The Coliseum, Inc., is a closely held corporation, and is a concert promoter for singers and other entertainers.

The Coliseum's Board of Directors and shareholders are the following:

The board members are Jupiter, Neptune, Vesta, and Vulcan.
Jupiter and Vulcan have been friends for years.
The four directors, plus Mars, are the only shareholders.
Each shareholder holds 20% of The Coliseum's outstanding shares.
Conflict of Interest Problems

Please use the Corporate Opportunity Doctrine to address the following questions.

The Coliseum hires a marketing firm to promote its services. This marketing firm, Pantheon Marketing Incorporated, is owned, but not managed, by the four directors of The Coliseum. Mars contests the decision to hire Pantheon, and files suit against the board for breach of its duty of loyalty.

#1: Is there a conflict of interest in this transaction?

#2: Is the marketing contract a "director's conflicting interest transaction" under MBCA § 8.60(1)? If so, what affect does that characterization have on the transaction?

#3: The Coliseum is considering merging with Tiberius, Inc., which is another concert promoter. Jupiter owns 25% of this company. His roommate owns 50% of the company. Jupiter fully discloses his ownership interest to the board, as he believes he must. Jupiter does not, though, disclose his roommate's ownership interest. Has Jupiter provided the "required disclosure" to the board regarding the transaction under MBCA § 8.60(7)?

Reference no: EM133638356

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