A director may make business decisions in reliance on information provided to him without incurring liability for negligence as long as he:
A) notifies the preparer of the information.
B) reasonably believes that the information is reliable.
C) conducts his own independent investigation.
D) is given a sworn affidavit by the preparer.

Question

Quizplus · Accepted Answer

A director can rely on information provided to him without incurring liability for negligence if he reasonably believes that the information is reliable. This is part of the business judgment rule, which allows directors to make decisions without fear of personal liability if they act on an informed basis, in good faith, and in the honest belief that the action taken was in the best interest of the company. Conducting an independent investigation or requiring a sworn affidavit is not a necessary condition for avoiding negligence liability under this principle.

A Director May Make Business Decisions in Reliance on Information