Business Judgment Rule

According to the California Corporations Code, even though officers and directors are deemed fiduciaries, boards are not required by law to make the "right" decision. The California Corporations Code protects directors from personal liability if they make informed decisions that result in damage or loss to others, provided their decisions were made: (1) In good faith, (2) In a manner which the directors believe to be in the best interests of the corporation, and (3) With such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. The rule does not apply to self-dealing, fraud, conflicts of interest, bad faith, or corporate waste.
Office: 818-991-5200
Direct: 818-991-9019