Question

Amy, Ryan and Colleen are directors of Old Market Taxidermy, Inc. At a recent Board of Director’s meeting they approve a proposal that causes harm to the corporation and the value of shareholder’s ownership interests. All the directors argue that they made an honest mistake. To avoid liability for their decision, the directors would argue ___________ protects them from liability.

the equal dignity rule

the business judgment rule

one of the directors cast a dissenting vote that appears in the minutes of the Board of Director’s meeting.

a quorum was present at the Board of Director’s meeting

Answer 1

Correct option: (b)

Reason: The business judgement rule states that when making business decisions, the directors made a informed decision and with the intention of doing good to the business and thus are protected from any lawsuits from stakeholders and other shareholders.