Ontario Barrister and Solicitor Practice Exam

What action is required if a director wants to sell a significant asset to the corporation?

1. A shareholders meeting for approval

2. A board meeting for a quick vote

3. No action is required if the director is the sole shareholder

4. Approval by email from majority shareholders

The correct answer is: A shareholders meeting for approval

A shareholders meeting for approval is required because a significant asset sale would significantly affect the corporation and its shareholders. A board meeting would not suffice as it would only involve the input and decision of the board members. No action is required if the director is the sole shareholder, but this is a less common scenario as most corporations have multiple shareholders. Approval by email from majority shareholders is not enough as it does not provide a formal and transparent meeting for all shareholders to discuss and vote on the sale. Therefore, A is the best option as it ensures proper communication and decision-making among all shareholders.