July 22, 2019 Articles

The Business Judgment Rule: A Shield and Sword

Key tips to know about the business judgment rule when litigating shareholder derivative actions.

By Iván Resendiz Gutierrez

Shareholders often try to use derivative suits to hold others responsible for their financial losses. The targets of these actions are usually corporate directors who stand in a fiduciary relationship of trust and confidence with the corporation. The shareholders will claim that they are suing derivatively on behalf of the corporation to vindicate corporate rights.

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