Why is the signal board protected by business judgment rule


Business Law Discussion

Part 1: one paragraph or more

When Facebook went public, its disclosure document said:

As a board member and officer, Mr. Zuckerberg owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Zuckerberg is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders.

Should corporate laws permit Zuckerberg to control the company without imposing a duty to act in the best interests of the other shareholders?

Part 2: one paragraph or more

An appraiser valued a subsidiary of Signal Co. at between $230 million and $260 million. Six months later, Burmah Oil offered to buy the subsidiary at $480 million, giving Signal only three days to respond. The board of directors accepted the offer without obtaining an updated valuation of the subsidiary or determining if other companies would offer a higher price. Members of the board were sophisticated, with a great deal of experience in the oil industry. A Signal Co. shareholder sued the board for having violated the duty of care. Is the Signal board protected by the business judgment rule?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Business Law and Ethics: Why is the signal board protected by business judgment rule
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