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Source Real Property Complete MBE Foundation List Showing the closest available flashcard practice.

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0 tracked cards Business Associations

A corporation considers a consulting contract with a company owned by one director's sibling. The interested director discloses the relationship and leaves the room before disinterested directors vote.
Which statement best describes how the transaction may be protected from a fiduciary-duty challenge?

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A conflicted transaction is always valid if the interested fiduciary says the price is reasonable. A conflicted transaction is always void and can never be approved. A conflicted transaction is cleansed by hiding the conflict until after performance is complete. Full disclosure followed by approval by disinterested directors or shareholders, or proof that the transaction was fair, can protect a conflicted transaction under many corporation statutes.

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