Enworth Pharma conducts a comprehensive study,which suggests high success rates for a project aiming to develop a strong anti-lymphoma drug.Trusting the experts who conducted the study,Enworth invests large amounts of financial capital into the project.The project fails and Enworth,along with its shareholders,incur massive losses.Which of the following protects Enworth Pharma from litigation by its unhappy shareholders?

Question

Quizplus · Accepted Answer

The business judgment rule protects corporate decision-makers from being held liable for decisions that turn out to be unsuccessful, as long as they acted in good faith and with reasonable care. Therefore, Enworth Pharma can use the business judgment rule as a defense against litigation by shareholders who suffered losses as a result of the failed project. The other options (A, B, and C) are not applicable in this scenario.

Enworth Pharma Conducts a Comprehensive Study,which Suggests High Success Rates