Law 3102 Spring 2011 Suggested Answer Added Dir Liab Bus Jud Problem

Law 3102 Spring 2011 Suggested Answer Added Dir Liab Bus Jud Problem

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POSSIBLE ANSWERS TO DIRECTOR LIABILITY PROBLEM A. A director’s fiduciary obligations impose limits on his ability to conduct personal business activities with the company for which he serves as a director. In this case, Roberto breached his fiduciary duty to the corporation and its shareholders as a result of the conflict of interest that arose from the sale of his office building to the company without disclosing his interest in the building. Absent approval by a disinterested board of directors or the shareholders after such disclosure, Roberto must prove that the sale of his office building to SoHo was fair and reasonable to SoHo. Since SoHo overpaid for Roberto’s office building by $500,000 the transaction is unfair to the corporation and may be set aside. B. Samuel will be successful in his lawsuit. The board members are not protected from liability by the business judgment rule. The business judgment rule protects directors if they have no interest in the subject (i.e. Board acts in good faith), are informed with
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This note was uploaded on 12/09/2011 for the course LAW 1101 taught by Professor Reed during the Spring '08 term at CUNY Baruch.

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