Wisconsin
How Aronson v. Lewis applies in Wisconsin: state-specific rules, key cases, and bar exam notes for Corporate Law.
Wisconsin follows the principles established in Aronson v. Lewis, particularly regarding the business judgment rule and the necessity of a demand requirement for derivative actions. This standard emphasizes the protection of directors' discretion in business decisions unless there is sufficient evidence of bad faith or gross negligence.
In Wisconsin, shareholders must generally make a demand on the board of directors before initiating a derivative suit, and the board's decision not to pursue the action will be respected unless shown to be made in bad faith.
This case reaffirmed the demand requirement established in Aronson, emphasizing that directors have the discretion to refuse shareholder demands if based on good faith business judgment.
Held that the business judgment rule protects corporate directors from liability when acting within their authority and in the best interest of the corporation.
Reiterated that shareholders need to prove either fraud or a clear violation of duty for the business judgment rule to be disregarded.
Wisconsin's application of the principles in Aronson closely aligns with the federal approach under the Business Judgment Rule but places a more explicit emphasis on the demand requirement in derivative actions. While federal standards also champion directors' discretion, Wisconsin courts provide specific avenues for shareholders to challenge bad faith decisions.
Understanding the demand requirement and business judgment rule as articulated in Aronson and its application in Wisconsin is essential for the Wisconsin bar exam, particularly under corporate law.