Commercial Law, 2022 Bar — Question 7-a

ESSAY

LOKO Co., using a fraudulent scheme, was able to sell its shares to investors. The sale proceeds were then secretly diverted by LOKO Co. to its wholly owned subsidiaries. Later, LOKO Co. became insolvent and was placed under receivership. On behalf of the investor-stockholders, the receiver demanded the inspection of the books and records of LOKO Co.'s subsidiaries. (a) Can LOKO Co.'s stockholders exercise, through the receiver, their right of inspection of the books and records of LOKO Co.'s subsidiaries? Explain briefly.

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