logo image

Hypothetical Scenario

In this case, Kora acquired a loan using the corporation as the collateral for the loan. This meant that if he defaults on payment of the loan, which he did, the bank would turn to the corporation to recover the money. The problem where is not acquiring the loan. The problem is acquiring the loan for personal purposes using the corporation facilities, which he is the president and a shareholder and not a full owner.  In addition, for the loan to be acquired using the corporation, he needs to get approval from all the other corporation shareholders.

The reason is that the corporate ownership rules and regulations recognize all the shareholders as having equal interest in the corporation. This eliminates the possibilities of one of the shareholders using the corporation for person interests. In addition, the corporate shareholders powers are the ones that make one of them to become the president of the corporation through election. However, this does not mean that the one elected as the president should make decisions such as using the corporate facilities as collateral for acquiring private loans.  (Hartman, L. & Desjardins, J., 2008)

In this case, it means that since Kora has defaulted on payment of

Need essay sample on "Hypothetical Scenario"? We will write a custom essay sample specifically for you for only $ 13.90/page

the loan, the bank will sue the corporation and require it to service the loan. This is against the corporations wish, as it had nothing to do with the loan. However, the court will have to determine whether the corporation or rather the shareholders were aware of this loan. If they were aware of the loan, then the corporation will have to service the loan.

In case the shareholders were not aware of the loan, the corporation is then supposed to sue Kora for misconduct and expect him to pay for the loan on his own. The corporation can therefore prove to the bank that it did not have knowledge of its use as collateral and that Kora used it fraudulently. It is also possible to prosecute Kora in a criminal court for fraud. The bank may also seek to recover the loan using any other asset that Kora may be having.  (Hartman, L. & Desjardins, J., 2008)

References

Hartman, L. & Desjardins, J. (2008). Business Ethics. Irwin: McGraw Hill Publishers.

Can’t wait to take that assignment burden offyour shoulders?

Let us know what it is and we will show you how it can be done!
×
Sorry, but copying text is forbidden on this website. If you need this or any other sample, please register

Already on Businessays? Login here

No, thanks. I prefer suffering on my own
Sorry, but copying text is forbidden on this website. If you need this or any other sample register now and get a free access to all papers, carefully proofread and edited by our experts.
Sign in / Sign up
No, thanks. I prefer suffering on my own
Not quite the topic you need?
We would be happy to write it
Join and witness the magic
Service Open At All Times
|
Complete Buyer Protection
|
Plagiarism-Free Writing

Emily from Businessays

Hi there, would you like to get such a paper? How about receiving a customized one? Check it out https://goo.gl/chNgQy