Bluestone Oil invests its money in a drilling project that was predicted by industry experts to yield very profitable results.Unfortunately,the predictions failed and Bluestone Oil incurred massive losses due to the failure.Which of the following protects Bluestone Oil from litigation by its shareholders?

Question

Quizplus · Accepted Answer

The business judgment rule protects directors and officers of a corporation from personal liability for decisions made in good faith and in the best interests of the corporation. If Bluestone Oil can prove that its investment decision was made in good faith and based on reasonable information, the business judgment rule will protect it from litigation by its shareholders. Thin capitalization refers to a situation where a company has insufficient equity capital compared to debt, and it is not relevant in this scenario. Strict liability doctrine and piercing the corporate veil are also not applicable in this case.

Bluestone Oil Invests Its Money in a Drilling Project That