Securities
Mar. 1, 2012
Tech-based startups: paving the way to a new liability risk
Certain stock sales are creating a new area of insurance liability for companies and their officers. By Kelley Harvilla of Carroll, Burdick & McDonough LLP.
LAST IN A TWO PART SERIES. Part one ran on Feb. 28.
To show that the officer (in selling his shares), or the board (in approving the sale) is liable for a breach of the duty of care, the plaintiff must show the officer or board did not act as a reasonably prudent person in a like position, acting in the best interest of the company. In doing so, the plaintiff must overcome the business judgment rule, which protects from liability those ...
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