Directors argue that no illegal activity had occurred

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Reference no: EM13836288

All of the directors of the XYZ Corporation were present at a meeting called on a Monday evening at 9 p.m. Meetings normally were held on Friday evenings at 6 p.m. At the Monday meeting, a report was made indicating that an agent of the corporation was having difficulties formalizing a contract in a foreign country. The report indicated that if funds were made available to a local political figure, the contract the company desired would be obtained. The directors unanimously voted to forward the necessary funds for this operation to the agent. An action was later commenced against the directors, alleging illegal activities. In response, the directors argue that: (1) no illegal activity had occurred; (2) if an illegal activity did occur, it was not at a valid meeting of the corporation and was therefore not an official action of the board; and (3) if they had to legally defend themselves, they would seek reimbursement from the corporation. Discuss each of the directors' contentions.

Reference no: EM13836288

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