If the board of directors refuses the shareholder's demand because it reasonably believes it would be improper to bring a lawsuit,the board of directors are protected:
A)from joint and several liability.
B)by indemnification.
C)from a court piercing the corporate veil.
D)by the business judgment rule.

Question

Quizplus · Accepted Answer

If a shareholder makes a demand on the board and it refuses the shareholder's demand to bring a suit,ordinarily the shareholder is not permitted to continue the derivative action.The decision to bring a lawsuit is an ordinary business decision appropriate for a board of directors to make.The business judgment rule,therefore,is available to insulate from court review a board's decision not to bring a suit.

If the Board of Directors Refuses the Shareholder's Demand Because