Asked by Earlicia Sexton on Jul 28, 2024

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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.

Business Judgment Rule

A legal principle that protects corporate directors and officers from liability for decisions made in good faith and in the interest of the company.

Takeover Defense

Strategies employed by a company to prevent or deter unwanted acquisitions or takeovers by another company.

Voting Shares

Shares of a company's stock that give the shareholder the right to vote on company matters at shareholders' meetings.

  • Comprehend the methodology and regulatory structure surrounding tender offers and defense mechanisms against takeovers.
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Trevor BiermanAug 02, 2024
Final Answer :
D
Explanation :
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.