Directors and officers whose failure to exercise due care results in harm to the corporation or the shareholders can be held liable for negligence unless the business judgment rule applies.

Question

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The business judgment rule provides a presumption that directors and officers acted in good faith and exercised due care in decision-making. However, this presumption can be rebutted if there is evidence of bad faith, self-dealing, or lack of reasonable inquiry. Therefore, if the business judgment rule does not apply, directors and officers can be held liable for negligence.

Directors and Officers Whose Failure to Exercise Due Care Results