Can you provide a rule that requires a so-called "arms length transaction"? I'm not sure that there is one.
The CEO, through the self-issuance of preferred shares, put himself in a position to take basically any action that he can get put up for a shareholder vote. Am I mistaken in believing that, as long as a transaction is disclosed as a "related party transaction", the fact that it was entered into based on a majority shareholder vote renders it legit?
I think the phrase "arms length transaction" was only included as a weak attempt at lending the transaction an air of propriety. But the fact that the phrase doesn't apply doesn't alter the legality of the transaction.
Am I mistaken?
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