Question

Joe jones is a 30% stockholder in abc corporation. although he owns more stock than any other stockholder owns, he may purchase and sell inventory only if he is designated as ____ for abc.

select answer from the options below
A. an agent
B. by other stockholders
C. a preferred stockholder
D. an affiliate

Answer 1

Joe Jones, a 30% shareholder in ABC Corporation, must be designated as an agent to purchase and sell company inventory. Being an agent gives him the authority necessary to act on behalf of the company, which is not inherently provided by his shareholder status.

Step-by-step explanation:

Joe Jones is a 30% stockholder in ABC Corporation, and despite owning a more significant number of shares than any other individual shareholder, to purchase and sell inventory on behalf of the company, he must hold a specific title that grants him the authority to do so. This required title is that of an agent.

Being an agent allows a person to act on behalf of the corporation in transactions involving its inventory, among other duties. This designation is necessary because owning a considerable percentage of stock in a company does not automatically grant one the authority to enter into transactions for the company. The correct answer to the question is A. an agent.

As a general principle in corporate governance, shareholders do not directly manage the day-to-day operations of a corporation; instead, they elect a board of directors to oversee management. Depending on corporate bylaws and state laws, authorization to transact business on behalf of the company typically resides with the officers and employees who have been given such authority either by the board of directors or by the bylaws themselves.