Respuesta :
To avoid liability for making a poor decision, Business judgment rule of conduct should be complied by Nordex's board of directors.
Give a brief account on Business judgment rule.
According to the business judgment rule, a corporate law tenet established from case law, courts should give company executives' business judgments some leeway. The foundation of it is the idea that "directors of a company... are endowed with [the] presumption, which the law affords to them, of being [motivated] in their behavior by a bona fide care for the interests of the business whose affairs the stockholders have committed to their charge. Most common law nations, including the United States, Canada, Wales, and Australia, have the rule in some form.
The burden of proving that the board of directors violated one of the three pillars of their fiduciary duty—good faith, loyalty, or due care—in making the challenged decision falls on the plaintiff when challenging the board of directors' activities in a corporation. In the event that they fail to do so, the plaintiff "is not entitled to any remedy unless the transaction represents waste... [that is], the exchange was so one-sided that no business person of ordinary, sound judgment could determine that the corporation has received adequate consideration."
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The complete question is mentioned below :
Nordex Corporation is in the business of manufacturing furniture. Because the industry has matured, Nordex is considering adding a new product line, manufacturing plastic products such as cases for compact discs (CDs). No director will have a personal interest in the decision to expand into those lines. To avoid liability for making a poor decision, what standard of conduct should Nordex's board of directors comply with?
Group of answer choices
A. Total fairness standard
B. Business judgment rule
C. Auction-type (Revlon) standard
D. Intrinsic fairness
