Ralph, a director at ZincX Inc., has been sued by the company's shareholders for making a poor financial decision that cost the company millions of dollars. Ralph can claim protection under the business judgment rule only if he had a vested financial self-interest in the financial decision under dispute. True or False?

Question

Business

Daniella Riddle

21 June, 01:17

Ralph, a director at ZincX Inc., has been sued by the company's shareholders for making a poor financial decision that cost the company millions of dollars. Ralph can claim protection under the business judgment rule only if he had a vested financial self-interest in the financial decision under dispute. True or False?

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Answers (1)

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Jaqueline · Answer 1

False

Explanation:

In order for an executive to claim protection under the business judgment rule they must prove that their decisions were rational and made in good faith. Business executives and the board of directors are responsible for making decisions and some will good and others may be bad, but they have to make those decision without fear of prosecution.