Rice Inc. seeks to purchase a substantial number of the voting shares of Sushi Company. The directors of Sushi resist Rice's takeover attempt. In analyzing whether this is reasonable, a court would apply
A)an appraisal right.
B)a takeover defense.
C)the corporation's policies.
D)the business judgment rule.

Question

Quizplus · Accepted Answer

The business judgment rule is the correct answer because it is a principle of corporate law that courts will not second-guess the decisions of a corporation's board of directors as long as those decisions were made in good faith, with the care that a reasonably prudent person would use, and with the reasonable belief that the decisions were in the best interests of the corporation. In the context of resisting a takeover attempt, courts typically apply the business judgment rule to evaluate whether the directors' actions were appropriate.

Rice Inc Seeks to Purchase a Substantial Number of the Voting