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corporate management review - belongs to the corporation 5...

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Chapter Review 1. Officers and directors have a fiduciary duty to act in the best interests of the shareholders of the corporation. 2. The business judgment rule protects managers from liability for their decisions as long as the managers observe the duty of care and the duty of loyalty. 3. Managers may not enter into an agreement on behalf of their corporation that benefits them personally, unless the disinterested directors or shareholders have first approved it. If the manager does not seek the necessary approval, the business judgment rule no longer applies, and the manager will be liable unless the transaction was fair to the corporation. 4. Under the duty of loyalty, managers may not take advantage of an opportunity that rightfully
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Unformatted text preview: belongs to the corporation. 5. Under the duty of care, managers must make honest, informed decisions that have a rational business purpose. 6. The Williams Act regulates the activities of a bidder in a tender offer for stock in a publicly traded corporation. 7. Under common law, shareholder welfare must be the board’s primary concern when establishing takeover defenses. If it is clear that the company will ultimately be sold, the board must auction the company to the highest bidder; it cannot give preferential treatment to a lower bidder. 8. Many states have passed antitakeover statutes that render hostile takeovers more difficult for the bidder....
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