What issues do you think a potential seal of shares raise

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Reference no: EM133215924

Facts: You are an independent member of the board of directors of CorpsFun, a large tech corporation.

CorpsFun began as a computer chip maker and then expanded into a number of other areas, including a social media platform, and web services (including back-end services for a number of large online banking platforms).

As CorpsFun expanded, part of its strategy was to make investments in many different tech businesses, and although some showed promise, the market seems to feel generally that CorpsFun has lost some of its luster and expanded too quickly and too broadly. Currently, the company is in trouble because it is lacking in cash to keep the business going. The company is currently trading at $35 per share, with a market capitalization of $3.5 billion.

The board has been concerned for some time about how to keep funding the corporation, because both management and the board feel that they are just a short period of time away from industry-wide domination. There is one big investment that CorpsFun had made-a pre-iPhone investment in Apple, which means the company has an enormously valuable stake.

The board of directors thought that they might sell or spin off the Apple shares to infuse cash into the company. You understand that this may have a potentially serious negative tax impact on CorpsFun. CorpsFun lawyers tell you that they can approach the IRS and get a definitive answer as to what tax treatment it will merit. One of your directors is also a director at Apple, and one option might be to have them see if some sort of joint venture is possible with them or another technology corporation.

Question 1. What issues do you think a potential seal of shares might raise?

Question 2. To whom do you owe duties?

Question 3. What do you think you should do and why?

Question 4. Prepare an Internal Memo to the Board WITH RECOMMENDATION

Prepare a one-page, bulleted internal memo to the board that outlines the key issues this scenario presents and recommends a course of action. Make sure your memo addresses the questions above.

Reference no: EM133215924

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