Kentucky
How Brehm v. Eisner applies in Kentucky: state-specific rules, key cases, and bar exam notes for Corporate Law.
Kentucky law aligns with the principles of Brehm v. Eisner in that it emphasizes a board's discretion in business judgment matters, provided they act in good faith and in the company's best interests. The general standard for directors' liability remains similar, requiring that directors make informed decisions following a reasonable investigation.
Directors are afforded protections from liability for decisions made in good faith, in the belief that they are acting in the best interests of the corporation, as long as they inform themselves prior to making business decisions (KRS 271B.8-30).
The court reaffirmed that directors are protected from liability if they can demonstrate reasonable care and good faith in their decision-making.
Directors must show that they exercised care in their decisions; however, they are presumed to act in good faith unless proven otherwise.
Affirmed the business judgment rule and noted that absent evidence of bad faith or self-dealing, the directors' decisions cannot be challenged.
Kentucky's approach is largely consistent with the federal standard under Delaware law, particularly regarding the business judgment rule. Both emphasize deference to the board's discretion in decision-making, although some nuances in state statutory protections may differ.
The principles from Brehm v. Eisner and Kentucky's business judgment rule are relevant topics for the Kentucky bar exam, particularly in the Corporate Law section, emphasizing director liability and fiduciary duties.