The initial investment for the new corporation

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Suppose you form a corporation with two other investors. Paul is putting up 60% of the initial investment for the new corporation, while you and Susanna are each putting up 20%. When you form the by-laws for the corporate charter, it is agreed that Paul will be able to choose six members of the board of directors and you and Susanna will each be able to choose two members so your influence on the board is directly proportional to each of your investments. The board of directors is then given the authority to hire the CEO of the corporation, and they choose a CEO that all three of you are happy with. But then over the holidays you and Susanna go on vacation and several members of the board of directors are also on vacation. Paul decides to fire the CEO and appoint his brother-in-law as the new CEO. You and Susanna are furious that he fired the CEO without consulting the two of you and also did not consult the board of directors. Paul replies that he can do whatever he wants with the corporation since he owns 60%. Do you think Paul would prevail in court?

Reference no: EM132188978

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