SMG LA 245 Lecture Notes - Lecture 5: Business Judgment Rule, Fiduciary, Insider Trading

• School: Boston University
• Department: Law
• Course: SMG LA 245
• Professor: Matthew W. Howell

Document Summary

First and foremost, officers and directors have a fiduciary duty to act in the best interests of the shareholders. Stakeholders: anyone who is affected by the activities of a corporation, such as: A judicially created presumption that officers and directors make informed decision in good faith and in the honest belief that their conduct was in the best interests of the company. If managers comply with the business judgment rule, a court will not hold them personally liable for any harm their decision cause the company or rescind their decisions. The obligation of a manager to act without conflict of interest. Prohibits managers from making a decision that benefits them at the expense of the corporation. Self-dealing - a manager makes a decision benefiting either himself or another company with which he has a relationship. When a manager engages in self-dealing, the bjr no longer applies. Disinterested members of the board of directors approve the transaction; or.