Fact Pattern 31-7 Enchilada Inc. seeks to purchase a substantial number of the voting shares of Fajita Inc .
Refer to Fact Pattern 31-7. The directors of Fajita resist Enchilada'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 applied by courts to determine if the directors' resistance to a takeover attempt is reasonable, as it protects directors' decisions made in good faith and in the best interest of the corporation.