Corporations Essay Example | Topics and Well Written Essays - 4750 words

Corporations - Essay ExampleIn this find, a duty of care involves the duty to get word that the corporations interests are protected and in doing so, directors must ensure that their conduct does not bring about harm to the corporation (Guth v Loft, Inc.). In the class work on lawsuit against the board, the claim is that the board of directors is jointly liable for the illegal conduct of Operator and comptroller. The claim is thence substantiated by findings that board directors Operator and Account breached their duty of loyalty and the board as a unscathed was negligent in not preventing or acquiescing in that breach of the duty of loyalty. Liability in this regard will be founded on the statutory duty of care articulated by the Model caper Corporation Act 1984. Pursuant to Section 8.30 of the Model business concern Corporation Act 1984, directors comport a responsibility to act with the care of an ordinary reasonable person in the directors home and how such a person wou ld be expected to act in similar circumstances (Model Business Corporation Act, Section 8.30). Therefore the substantive issue is whether or not the board as unit indirectly and through agency, breached the duty of loyalty and in doing so, directly breached the duty of care. From a purely adjective perspective, the business judgment rule engages judicial review of the substantive issues and argument. ... On the facts of the case, it break throughs that the board relied on control and his teams to appropriately carry out the corporations monetary affairs. Moreover, the audited financial statements sent to the directors would not shoot revealed an obvious issue although a closer examination of the books would score revealed the unlawful activities. The main question in assessing the business judgment rule is therefore whether or not it was prudent for the board to trust restrainer and to accept the audited financial statements at face value. Since audited financial statements are usually prepared by a certified public accountant and its authentic is confirmed by the certified public accountant, it does not appear to be unreasonable for the board to rely on the audited financial statements (Merrill Lynch). If the certified public accountant was Accountant and his team, it is only with hindsight that the board might have a reason to second guess his preparation of the audited financial statements. Therefore this part of the class action lawsuit will not likely succeed. The board appears to have acted prudently or reasonably and had a rational basis for their decision and cannot be said to have acted in breach of a duty of care and therefore did not breach the duty of loyalty. With comply to the payment of a US$50 fine to avoid an indictment against the company, it can be argued that this position act is negligent since the case against Operator appears to be falling apart. Procedurally, if the case against Operator, the main actor in the scandal is weakenin g, the case against Mousetrap is decidedly weaker. However, the prospect of facing an investigation and an