Consider the case below about Business Judgment Rule
CASE SUMMARY 15.4 Grobow v. Perot, 539 A.2d 180 (Del. 1988) BUSINESS JUDGMENT RULE (particularly EDS), and cease any criticism of GM's H. Ross Perot became the single largest shareholder directors. A group of GM shareholders sued the direc- and a director of General Motors as a result of GM's tors under the theory that the directors had breached acquisition of Perot's highly successful company their fiduciary duty by wasting corporate assets in buy- Electronic Data Systems (EDS). A rift grew between ing Perot's silence. The directors asserted the business Perot and GM's other directors. and after appointing judgment rule as a defense. a subcommittee of directors to study possible alterna- tives, GM's directors offered to purchase back Perot's CASE QUESTIONS sock at a significant premium over market value. In 1. Who prevails and why? exchange for the payment. Perot agreed to leave his 2. What fiduciary duty is at issue? director's seat, not compete with any GM subsidiaryAccording to the company's policies, the firm whose structure is represented by "Org Chart B" has very specific rules about communication. For example, if Ulysses finds that Xu has failed to follow the company's purchasing guidelines when hiring a contracted trainer, Ulysses is not permitted to question Xu about the matter before first communicating his preliminary finding to both Oliver and Rebecca. What organizational characteristic is best illustrated by this policy? O formalization open-door the distinction between "line" and "staff" departments O standardization O span of control corporate governanceA corporate charter species that the company may sell up to 40 million shares of stock. The company sells 32 million shares to investors and later buys back 13.0 million shares. The number of authorized shares after these transactions are accounted for is: Multiple Choice 0 2? million shares. 0 19 million shares. 0 32 mil lion shares. 0 40 million shares. QUESTION 49 Which of the following is true about marketing messages and social media? a. Traditional marketing messages are bottom up. Ob. Social media marketing messages are not like traditional marketing messages. c. Social media messages are typically bottom up. d. Traditional marketing messages are top down, similar to social media messages e. Social media follows traditional marketing messages and how they are distributed QUESTION 50 What do users say is their primary reason for using social media? O a. Reconnecting with school mates Ob. Reconnecting with old friends O c. Promoting their own goals and objectives O d. Sharing information about themselves O e. Staying in touch with family and friendsQUESTION 28 Is a decision by a director to exercise a power for both a proper purpose and an improper purpose a breach of duty? O a. Yes, always. Ob. Yes, but only if, but for the improper purpose, the director would not have exercised the power. O c Yes, but only if, but for the proper purpose, the director would not have exercised the power. O d. No. QUESTION 29 Which of the following is not one of the requirements that must be satisfied before a director can rely on the Corporations Act 2001 (Cth)'s 187 to avoid liability for breach of the duty to act in the best interests of the company? O a, The company is a wholly owned subsidiary. O) b. The constitution of the company expressly authorises the director to act in the best interests of the parent company. c. The director acts in good faith in the best interests of the parent company. O) d. The company is insolvent at the time the director acts or becomes insolvent because of the director's act. QUESTION 30 The statutory business judgment rule allows the directors the benefit of a presumption that they are not in breach of which of their duties? C a. The duty to act in good faith in the best interests of the company. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Surve MacBook Air
