Connecticut
How Brehm v. Eisner applies in Connecticut: state-specific rules, key cases, and bar exam notes for Corporate Law.
Connecticut law generally aligns with the principles of business judgment and director duties established in Brehm v. Eisner, which underscores that courts will defer to the business judgment of directors absent evidence of bad faith, fraud, or gross negligence. This applies within the context of Connecticut's statutory framework and common law regarding corporate governance.
In Connecticut, directors of corporations are afforded the presumption of good faith and the business judgment rule, which protects directors from liability for decisions made in good faith that are believed to be in the best interests of the corporation.
The court reaffirmed the business judgment rule, emphasizing that directors' decisions are entitled to deference if made in good faith and with proper authority.
The case reinforced that directors may pursue their business strategies so long as they act in the interest of the corporation without violating their fiduciary duties.
The court relied on Brehm's reasoning to dismiss claims against directors for breaches of duty, finding no credible evidence of bad faith or self-dealing.
Connecticut's application of the business judgment rule mirrors the federal standard, allowing directors significant latitude in decision-making as long as actions are taken in good faith and for a legitimate corporate purpose. However, Connecticut courts have placed additional emphasis on the fiduciary duties owed to shareholders, sometimes requiring more transparency than federal counterparts.
Current and future Connecticut bar exam candidates should be familiar with the business judgment rule and its implications, as these principles are frequently tested in corporate governance scenarios.