MN Bar Practice Questions - Minnesota Bar Examination Exam

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Disinterested directors, acting on an informed basis and in good faith, make a business decision that turns out poorly. A shareholder sues for the resulting losses. Which doctrine most likely protects the directors?

The entire fairness standard The ultra vires doctrine Strict liability for corporate losses The business judgment rule, presuming directors acted on an informed basis, in good faith, and in the honest belief the action was in the corporation's best interests

Correct Answer:

The business judgment rule, presuming directors acted on an informed basis, in good faith, and in the honest belief the action was in the corporation's best interests

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