WA Bar Practice Questions - Washington Bar Examination (NextGen UBE) Exam

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A Washington corporation's board of directors approves a transaction in which a director has a material financial interest, and the disinterested directors did not approve it after full disclosure. A shareholder challenges the transaction. Which standard generally governs judicial review of an interested-director transaction?

The business judgment rule, with full deference to the board Rational basis review The entire fairness standard, requiring the proponent to show fair dealing and a fair price Strict scrutiny under the Equal Protection Clause

Correct Answer:

The entire fairness standard, requiring the proponent to show fair dealing and a fair price

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