Techno-Corp. was authorized by its’ Articles to issue 200,000 shares of stock. Mallory bought 60,000 shares. Six of his associates bought 10,000 shares each. Forty investors who were not well known to Mallory bought 2000 shares each. Mallory thought of himself as an entrepreneur and considered the corporation to be “his business”. He served as both President and Chairman of the Board. He and the six shareholders who owned 10,000 shares each made up the board of directors. Formal directors meetings were never held. Mallory believed that since he and the other directors owned a majority of the shares, there was no need to invite the other shareholders to the annual shareholders meetings which were held at Club Margarita –Mallory’s favorite bar — following an informal meeting of the directors.
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