Question

The business judgment rule provides corporate officers and directors protection when Multiple Choice the liability is a result of a decision that involves a breach of duty. they are unaware of some of the material aspects of a decision. they have a financial self-interest in the disputed transaction. they set up a committee to establish a procedure for making decisions that are in the best interests of the corporation.

Answer 1

Answer:

they set up a committee to establish a procedure for making decisions that are in the best interests of the corporation.

Explanation:

The business judgment rule provides corporate officers and directors protection when they set up a committee to establish a procedure for making decisions that are in the best interests of the corporation.

Generally, the business judgment rule is a legal principle that primarily protect the board of directors from breach of fiduciary duty liability, in as much as the directors acted in good faith of the shareholders and ensuring a logical and well informed decision-making process.

The fiduciary duty liability of the corporate officers and directors of an organization to its shareholders are duty of loyalty, care, prudence, which implies, they'll always make the interest of the corporation and its shareholders a high level priority.

Hence, the business judgment rule is aimed at protecting and mitigating the risks faced by corporate officers and directors in the event of litigations because it is assumed that they're acting in the interest or favor of the corporation and its shareholders.