Question

Indicate which activities of Stockton Corporation violated the rights of a stockholder who owned one share of common stock.

a) Did not allow the stockholder to sell the stock to her brother.
b) Rejected the stockholder's request to be put in charge of its retail store.
c) When additional common stock was later issued, the company did not give the shareholder the preemptive right to protect her proportionate interest.
d) Rejected the stockholder's sale of stock on an organized exchange.
e) In liquidation, paid the common shareholder after all creditors were already paid.

Answer 1

Stockton Corporation violated the rights of a stockholder who owned one share of common stock by not allowing her to sell her stock to her brother, not giving her the preemptive right when additional shares were issued, and paying her after all creditors in liquidation.

Step-by-step explanation:

The activities of Stockton Corporation that violated the rights of a stockholder who owned one share of common stock are:

1. a) Did not allow the stockholder to sell the stock to her brother: The stockholder has the right to freely transfer their shares to other parties unless there are restrictions in the company's bylaws.
2. c) When additional common stock was later issued, the company did not give the shareholder the preemptive right to protect her proportionate interest: The stockholder should have been given the opportunity to purchase additional shares in proportion to their existing ownership to maintain their relative ownership percentage.
3. e) In liquidation, paid the common shareholder after all creditors were already paid: In liquidation, stockholders are typically paid after all creditors have been paid off, but the order of distribution may depend on the specific terms of the company's charter or bylaws.