Topic 2

Question 1

what is the director’s duty of Good Faith

Answer 1

violation of good faith means fails to apply minimum levels of diligence

Question 2

what is the business judgemtn rule_

Answer 2

as long as the director excercises due care, he is not liable.

but standards do change as to such judgment. So far

• in good faith
• best internest of the corp
• on an informed basis
• not be wasteful
• not involve self-interest

Question 3

Directors’ duty in Uk, France and Germany

Answer 3

UK

• within power
• promote company interest
• independent jugement
• excercise reasonable care, skill and diligence
• avoid conflict of interests
• not receiving from 3rd
• decalre intereste in proposed transaction

German

France
- member may instigate civil liability against managers for breach of legislative or reg provisions
= prohibition from contracting loans

Question 4

what is the Entire Fairness Doctrine

Answer 4

DE courts: when a controlling SH seeks to acquire minority interest, he can do one of the two things

1. use majority ownership position to approve and complete buy out, and he has to prove that the buyuot proce and buyout process were fair to minority
2. shift the burden to the plaintiff by following a process for replication and negotations with its subsidiary, with a committee of independent subsidiary Ds

Question 5

what is the Director’s duty of Loyalty

Answer 5

inform themselves before taking actions

Loyalty: alway in the best interest of the corporation and its shareholders

• not putting his own before the Corp
• offer all business opportunities
• not diluted becasue of conflicting obligations