Question

In "interested transactions," the burden falls on:

a) Shareholders
b) Customers
c) Directors of a corporation on both sides of a transaction
d) Government regulators

Answer 1

The burden in interested transactions falls on the directors of a corporation, who must prove that their decisions are fair and not self-serving, despite potential conflicts of interest.

Step-by-step explanation:

In interested transactions, where a conflict of interest may exist due to directors being on both sides of a transaction or having an interest in the outcome, the burden falls on the directors of a corporation.

The directors are elected by the shareholders to act as the first line of corporate governance, making decisions in the best interest of the company and its shareholders.

Corporate governance also involves auditing firms and outside investors, who play a role in ensuring that the company's financial information is accurate and reliable.

However, when it comes to interested transactions, it is the directors who must demonstrate that their decisions are fair and do not unduly benefit their personal interests over those of the shareholders or the corporation itself.