If a Court Determines a Manager's Corporate Decision Amounted to Self-Dealing

question 22

Multiple Choice

If a court determines a manager's corporate decision amounted to self-dealing:

• A) the business judgment rule will not apply.
• B) the transaction being challenged will be automatically voided.
• C) the manager is automatically personally liable to the corporation.
• D) All the above.

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Definitions:

Preemptive Rights

Privileges granted to existing shareholders to buy additional shares in the company before the shares are offered to the public, thereby protecting their ownership percentage.

Issued Stock

Refers to the number of shares that a company has officially issued to shareholders.

Preferred Stockholders

Investors who own preferred shares in a company, which typically gives them priority over common stockholders in terms of dividends and assets in the event of liquidation.

Corporate Creditors

Entities or individuals that have lent money or extended credit to a corporation and have a right to be repaid.