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Corporations

Terms in this set (72)

In absence of fraud, illegality, or self-dealing, cts won't disturb GF business judgments. Rebuttable presumption director reasonably believed actions in best interests of corp.

Overcome rule by showing -
1) didn't act in GF
2) director not informed to extent director reasonably believed necessary to make decision/BJR won't protect dirs when they don't do sufficient investigation/deliberation before make decision
3) didn't show objectivity or independence from relation to or control by another having a material interest in conduct (how disinterested are dirs?
4) sustained failure to devote attention to ongoing oversight of business and affairs of corp
5) failed to timely investigate matter of significant material concern after being alerted in manner would have caused reasonably attentive director to do so
6) director received financial benefit not entitled to, and other breach of duties to corp

Good faith - presumption of GF overcome if challenger shows fraud, dereliction of duty, condoning illegal conduct, conflict of interest
- fraud - knowingly disseminate false info
Dereliction duty - consistent or systematic failure to exercise oversight (no reporting or info system or controls, or fail to monitor those) - must show dir knew not discharging duties.
- condoning illegal conduct - fail to act on red flags
- conflicts interest - not protected by BJR if personal interest in outcome corp action

Exculpatory provisions in articles gen don't protect from liability for breach of loyalty, acts not in GF, or transactions receive improper personal benefit

NOTE - if conclude BJR doesn't apply --> then do analysis for both duty of loyalty and duty of care, and BJR doesn't apply to either. BJR and fiduciary duties are two separate steps.