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Hоw mаny wildlife biоlоgists аre required to be on the MS Wildlife Commission?
Essаy Questiоn 2 Xаndu Cоrp is а public cоrporation. Xandu has several wholly owned subsidiaries and one majority-owned subsidiary, Udax, Inc. Xandu owns 90% of Udax’s voting shares, and the remaining shares are held by public investors. The board of Udax consists of four individuals, all of whom are current Xandu executives. The Udax board never meets in person as a board, but once a quarter the office of the Xandu Chief Legal Officer prepares “Minutes in Lieu of Meeting” which the four directors sign. Xandu maintains a single investment and banking account for all its subsidiaries, including Udax, keeping careful records of which subsidiary has claims to which funds in the joint account. However, it manages this money, as well as Udax’s funds, with an eye to the interests of the entire organization. Thus, for example, if one subsidiary is generating profits, Xandu might cause the subsidiary to declare a dividend so that Xandu can reinvest it in another, or to lend surplus funds to another subsidiary. Whenever Udax has made profits, it has issued dividends in nearly equal amount, retaining little or none of its earnings. When Udax later requires capital, it borrows either from a regional bank or from Xandu itself. Recently, Udax engineers came up with what they thought was a brilliant plan for a new product. The board of Xandu agreed, but decided that a different group, in a different corporate subsidiary of Xandu (called Yackity Inc.), would do a better job bringing it to market. They therefore ordered Udax to cease work and transfer all ideas and IP to Yackity Inc. No money changed hands, although one of the relevant engineers was transferred from Udax to Yackity to continue working on the project. Udax’s largest current profit center is a product Macro Sludge Generator. It uses scrap metal, old munitions and expired goose feed to produce large quantities of electricity. Unfortunately, the process is extremely smelly, and if not carefully (and expensively monitored), it poses a small chance of a large explosion. Question 1: Minority shareholders of Udax, Inc. have brought suit against Xandu Corp., alleging that Xandu breached its fiduciary duties. The claims stem from (1) Xandu’s decision to cause Udax to pay nearly all of its profits as dividends, and (2) its directive that Udax terminate work on a new product and transfer all related intellectual property to another Xandu subsidiary, Yackity Inc., without compensation. Evaluate the strength of these claims. (10 points) Question 2: Udax’s Macro Sludge Generator fails. The consequent disaster renders a large area uninhabitable; the smell may take 20 years to clean up. Moreover, without the Generator, Udax is unable to meet its contractual obligations to provide electricity. Udax’s tort victims and contract counterparties sue Udax in a state court and win, but are unable to collect their full judgments because Udax has insufficient assets. Can the judgment creditors pierce the corporate veil to reach Xandu? (10 points) Question 3: The board of Xandu has increasingly emphasized its commitment to environmental and social governance (ESG) leadership. As part of this initiative, the board authorized the creation of a well-funded in-house research center and a lobbying division tasked with advancing legislation favoring renewable energy and eliminating certain regulatory barriers to alternative energy development. The board implemented a formal compliance policy requiring quarterly certification from senior officers that all lobbying and advocacy activities comply with applicable laws and ethical guidelines. However, the board never established a committee to oversee lobbying compliance specifically. Xandu’s lobbying staff, led by politically connected executives, have engaged in increasingly aggressive tactics. Internal emails reveal that lobbyists regularly pressure elected officials by threatening to fund their electoral opponents unless they support Xandu’s policy goals. The emails also show lobbyists promising senior jobs at Xandu or its affiliates to current regulatory officials who demonstrate “reliability.” Some of these emails were forwarded to members of the board, including a message flagged by the general counsel as potentially creating “ethics optics issues.” In response, the board stated that it would consider forming a committee to investigate the matter, but no such committee was ever formed, and no substantive follow-up occurred. A shareholder of Xandu has now brought a derivative action against the board, alleging that the directors breached their fiduciary duties by failing to detect and prevent misconduct in lobbying and political engagement. Please evaluate the shareholder’s claim. (10 points)