Business Judgment Rule

The business judgment rule protects a director(s) from personal liability if he or she has performed diligently and carefully in legitimate furtherance of corporate objectives and purposes and has not acted fraudulently, illegally, or otherwise in bad faith. The business judgment rule may be codified, but it is largely a matter of judicial interpretation and application. The business judgment rule is frequently invoked in shareholder damage suits against a director or board of directors. Courts generally acknowledge that the business judgment rule either does or may apply to corporate officers.

Business & Corporate Entities> Corporations> Shareholders & Other Constituents> Meetings & Voting

(Preparations for the Annual Shareholder Meeting)

Corporate Creditors

Generally, directors do not owe a fiduciary duty to a corporate creditor when that creditor has contracted exclusively with the corporation. However, a director may owe a fiduciary duty to a corporate creditor to protect the corporate assets when the corporation becomes insolvent.

Private Treble Damage Actions Under Federal Antitrust Law

Under federal antitrust law, persons and companies harmed by anticompetitive conduct may seek an award of triple their damages, an injunction, and costs of the action (including attorney fees) against a party that violates federal antitrust laws. For example, price fixing or an agreement among competitors on the price they will charge is considered a per se illegal violation of Section 1 of the Sherman Act, 15 U.S.C.S. § 1, that the government may prosecute as a felony. As a further deterrent to such activity, those harmed by the violation may seek treble damages and an injunction.

Securities Law

(An Outline of Federal Securities Laws)