Standards Governing Actions of Corporate Officers - Explained

The video tutorial discusses the fiduciary duties of care and loyalty that officers must observe, similar to directors, but with a focus on day-to-day operations. It explains that officers are generally not liable for their conduct if they maintain these duties. The business judgment rule protects officers by raising the standard of care required to breach their duty, requiring extreme recklessness or intentional harm. Officers must ensure decisions are informed, in the corporation's best interest, and legal to be protected. Avoiding self-dealing and taking corporate advantages is crucial for meeting the duty of loyalty.

What are the fiduciary duties that officers must observe, similar to directors?

• Duties of efficiency and effectiveness

• Duties of honesty and integrity

• Duties of transparency and accountability

• Duties of care and loyalty

In what context do executives have increased focus and decision-making responsibilities?

• Long-term strategic planning

• Day-to-day operations

• Financial auditing

• Marketing strategies

What does the business judgment rule require to breach the duty of care?

• Simple negligence

• Gross negligence

• Extreme recklessness or intentional conduct

• Minor errors in judgment

Which of the following is NOT a condition for the business judgment rule to protect an officer?

• Decisions are reasonably informed

• Decisions are in the best interest of the corporation

• Decisions are blatantly illegal

• Decisions have a rational business basis

What must officers avoid to meet the standards required for the duty of loyalty?

• Self-dealing and taking corporate advantages

• Ignoring shareholder interests

• Making uninformed decisions

• Focusing solely on short-term profits