Using the IRAC method, Discuss the issues involved, the applicable legal rules, and an application of the law to the facts to reach your outcome. Answer this is 250-500 words.
Ajax Corporation is in the business of manufacturing foam insulation for homes. Because the industry has matured, Ajax is considering adding a new product line, manufacturing plastic products such as casings for cell phones and computers. No director will have a personal interest in the decision to expand into those lines.
The board of directors has 12 members. Ajax’ bylaws provide that a majority of seven or more directors is necessary to form a quorum. At a meeting of the board of directors, a resolution is adopted authorizing the sale of a substantial portion of the corporate assets to Paul Plum, a director. Paul is one of the eight directors present.
Also, at the same meeting, the Board of Directors issued 1000 shares representing 10 percent of the corporation to George in exchange for an unsecured promissory note to pay Anthrax $50,000 within the next 20 years. George is the son of Alvin, owner of 70 percent of the shares of the corporation. The total book value of the corporation at the time Ajax issued the shares was $5,000,000. Barrett and Emory, owners of 20 percent of the total shares, discovered the transaction one month after it occurred.
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