Cheap Pharma Inc.

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POCKETING THE GREENS CASE STUDY 1. Immediate Issue(s) or Problem(s) In Pocketing the Greens case, Cheap Pharma Inc. (CPI), a pharmaceutical company specializing in generic drugs sued Mr. De Guzman and two other members of the Board of Directors (BOD) for profiting from the transaction they made with CPI’s competitor and potential business partner named Green Med (GM). The CPI’s shareholders are demanding Mr. De Guzman as well as the two other members of BOD to render an accounting and return whatever profits they made from their transaction with GM to CPI. Is CPI in the right position to do this? What duties do directors owe the corporation which they serve? In this case, CPI and GM are competitors. Both of them are pharmaceutical companies. However, CPI is suffering from low sales due to fierce competition. On the other hand, GM is an insolvent company who is famous for its innovative use of lagundi leaves…show more content…
Thus, the BOD was forced to use the excess fund for buying the GM’s shares of stocks to cover the reconstruction of the plant. Mr. De Guzman and the two directors who processed the transactions convinced Dr. Gonzales to sell the shares to them instead. Dr. Gonzales agreed and the directors ended up buying the shares of stocks intended initially being sold to CPI. Given these pieces of information, were the directors exert enough effort to make CPI meets its obligations with GM? Were the directors in this case justified in buying the shares of Green Med? Can CPI sue GM and the directors for selling and buying the shares of stocks? Consider the possibility that CPI was not able to meet its obligations, can GM through Dr Gonzales sue CPI? The lawful and moral issues and the questions rose in this case study is what the author aims to resolve towards the end of this
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