Asked by Jamie Wilson on Jun 13, 2024
Verified
Nordex Corporation is in the business of manufacturing furniture.Because the industry has matured,Nordex is considering adding a new product line,manufacturing plastic products such as cases for compact discs (CDs).No director will have a personal interest in the decision to expand into those lines.To avoid liability for making a poor decision,what standard of conduct should Nordex's board of directors comply with? Briefly explain what the board must do to comply with that standard.
Standard Of Conduct
The expected levels of behavior or ethical practices required of a person or organization, particularly in a professional context.
Expand
to increase in size, volume, quantity, or scope.
Manufacturing Plastic Products
The process of producing items from plastic materials through various methods such as molding, extrusion, or assembly.
- Gain insight into the proceedings and legal guidelines in board meetings and the role of directors within various models of corporate governance.
Verified Answer
CW
cristine wauthionJun 13, 2024
Final Answer :
Because the board has no conflicts of interest,the board must comply with the business judgment rule.The board must make an informed decision based on a reasonable investigation into the new product lines and have a rational basis to believe that its decision is in the best interests of the corporation,that is,make a decision that is rationally related to the facts revealed by the reasonable investigation.
Learning Objectives
- Gain insight into the proceedings and legal guidelines in board meetings and the role of directors within various models of corporate governance.