Mark Twain said he never had to remember anything because he always told the truth. Similarly, directors historically have not worried about what they did, because, if they acted in diligently and in good faith, they were shielded by the business judgment rule. However, recent developments, including both the results of notorious corporate scandals and the adoption of the Sarbanes-Oxley Act, with increased duties to monitor accounting and the relationship between the corporation and its auditors, appear to have increased the showing necessary to establish directors? compliance with the duties of care and loyalty. Elements of this showing may include the adoption of an internal audit function and increased scrutiny by the audit committee.
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