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Benefit Corporation Law and Governance by Frederick Alexander

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CHAPTER EIGHTOperating Benefit Corporations in Extraordinary Situations

Chapter 7 addressed the ways that courts may review ordinary course decisions of benefit corporation directors, and the implications for operations and board decision making. This chapter will address standards of review and board outside the ordinary course.

The analysis in chapter 7 revolved around the business judgment rule, which leaves ordinary decision making almost entirely in the hands of directors. In extraordinary situations, however, other factors outweigh those that favor business judgment protection. For example, when directors have a conflict due to an interest outside of the corporation, the business judgment rule does not apply, shareholders can challenge ...

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