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Question
Fact Pattern 38-1Standard Company (SC) and Typical Corporation (TC) form United, Inc., a close corporation, and agree to restrict the transfer of its stock to anyone else. SC sells its physical assets, but not its United stock, to Variety, Inc. TC files a suit against SC.
Refer to Fact Pattern 38-1. A reasonable purpose for a stock transfer restriction in a close corporation, like the agreement between SC and TC in the previous question, according to the court in Case 38.1, Salt Lake Tribune Publishing Co. v. AT&T Corp., is
a. a desire to limit the participation of outsiders in the firm.
b. a goal to restrain insiders from taking advantage of their position.
c. an attempt to restrain the free flow of commerce among investors.
d. a wish to restrict the transfer of the shareholders' physical assets.
Answer
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