The business judgment rule shields a corporate director or office from liability as long as he or she acts in goof faith without a corrupt motive. Unless there is evidence of fraud, dishonesty, or incompetence, courts will generally refuse to substitute its judgment for the judgment of the directors or officers of corporations. As long as there is a reasonable basis that indicates the challenged translation was entered into with due care and in good faith, the business judgment rule will almost always carry the day and protect the officers and directors. The business judgement rule also applies to members of a limited liability company.
Shareholders that want to challenge corporate action, have an uphill battle due to the business judgment rule. Contact Mark D. Walters Comments are closed.
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