Tuesday, November 4, 2014

A view for an expanded direct standing - 4

Two things here.
First, my referring to the injury to the corporation to mean the absence of a justification for shareholders dilution injury is part of the more general absence of sufficient benefit through the corporation to shareholders as a justification for their injury.Expanding the injury question to a benefit question was stated here because there are situations were the corporation is not injured at all. If  a corporation can generate and continue to generate proceeds at its best capacity from the issuing and selling of shares with the difference being only the continuous increase of outstanding shares then the corporation did not suffer any injury. That is because, it means no difference to a corporation whether it is being held through millions or billions of shares. Contrast that with how shareholders are always affected by any amount of dilution.
Extending the benefit to reach shareholders through the corporation was stated here because it seems that their are situations were a corporation can benefit from the issuing and selling of shares but not in a way that can benefit its current shareholders.

The word "benefit" here also include the meaning of doing something necessary.

Secondly, it seems I was wrong in suggesting that a shareholder can demand correcting the injury to the corporation that failed to justify the dilution to his ownership from direct standing even if there is a path to return his ownership to its original percentage and correct his injury. The situation is like if A was trusted with an amount of B's money to be spent only for the benefit of some ,for example,charitable organization. While B would have a direct standing in suing A based on the injury of violating the implied agreement in that trust, it seems that he still cant make a demand that jumps to correcting the problem by giving an equal amount of money to that charity if there is a path to correcting the injury by returning the money back to him. However that view was only an extension to my main purpose of emphasizing the direct standing right for a shareholder to sue on a dilution he suffered through the distinction I referred to in the first post.
 

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