Entire Fairness Test

Definition:

A test designed to determine whether a director has breached his or her fiduciary duty of loyalty to a company. It examines the elements of a transaction to which the director was party. The test considers more than the commercial rationale of the transaction, and requires the examiner to look at the timing of the transaction, as well as how the transaction was initiated, structured, negotiated, and disclosed to the Board of Directors (BoD), in addition to a review of economic and financial considerations.

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