d. preemptive rights to buy Standard shares on any new issue ANSWERING MORE LEGA

Question

d. preemptive rights to buy Standard shares on any new issue ANSWERING MORE LEGAL PROBLEMS 1. The directors of Urban Credit Corp.-a consumer, cor- 2. B porate, and investment bank-voted to invest in sub- C prime lending. Soon after, the housing market declined, or foreclosures increased, and other subprime lenders col- w lapsed. Subsequently, Urban Credit suffered significanto losses. Were Urban Credit's directors liable for their decision to engage in this course of business? No. Directors are not insurers of business success. Honest mistakes of judgment and poor business decisions on their part do not make them liable to the corporation or its share- holders for damages. This is the and officers must act within their authority and within the poration. They must also exercise rule. For the rule to apply, directors . of the cor- . Here, the directors of Urban Credit . did not disregard their duties or act in bad faith. 438

Explanation / Answer

Ans. This is an interesting question , Let's start answering it :

This is the Business Judgment Rule. For the rule to apply, directors and officers must act within their Prescribed and Designated authority and within the Scope, Power and Best Interests of the corporation. They must also exercise their discretions with Utmost Honesty , Good Faith and comply with the State Laws.

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