Sneed v. Webre

The business judgment rule in Texas generally protects corporate officers and directors, who owe fiduciary duties to the corporation, from liability for acts that are within the honest exercise of their business judgment and discretion. See Cates v. Sparkman, 73 Tex. 619, 11 S.W. 846, 848-49 (1889). This case involves application of the business judgment rule to a shareholder derivative lawsuit brought on behalf of a closely held corporation. A shareholder of a closely held parent corporation asserted a derivative lawsuit on behalf of the parent corporation’s wholly owned subsidiary against…