BU231 Study Guide - Final Guide: Fiduciary, Financial Statement, Secret Profit
Document Summary
Chapter 26 internal affairs of a corporation. Internal affairs are the day-to-day management of a company, not the business it conducts. Stakeholders: other interest parties such as employees, creditors, etc. The act conveys that director"s have the power to issue shares, declare dividends, adopt by-laws, and to call meetings of the shareholders. Cannot be negligent standard of the ordinary person. Can rely on information provided to them as long as they are not willfully blind. If a director agrees to situations of misconduct/negligence than s/he can be held personally liable. If a director votes for a decision that"s financially detrimental to the corporation, and it becomes insolvent, h/she can be held personally liable. If taxes are not paid, directors can be held personally liable. Due diligence: acted diligently, relied on audited financial statements. Business judgment rule: courts will grant business experts the benefit of doubt and not easily criticize a business decision. Judges recognize sound decisions may ultimately be unsuccessful.
