Business Judgment Rule

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Different from a sole proprietorship, partnership or LLC, a corporation, “is a legal entity formed compliance with statutory requirements. The entity is distinct from its shareholders-owners.” Officers and directors are responsible for managing and directing the corporation; as a result, to aid officers and directors perform business decisions without fear of liability, it was create The Business Judgment Rule (BJR). Because it is presume that officers and directors will execute due care and best interest of the corporation success, this doctrine provides immunity to the company officers and directors for honest mistakes or unhealthy corporate decision. The U.S Business Judgment Rule (USBJR) can apply if directors or officers meet the …show more content…

A party should bear the onus of proof in raising the defense.
2. It is required for a director to be informed about the subject matter of the judgment.
3. Is the standard that the director’s judgment must meet to be in the best interests of the corporation one of rationality or reasonableness? As mention before, the BJR protects corporation’s decision makers from due care and bad decisions. Because of unpredictable business situations and the best plans may often go wrong, a corporation is always at risk of losing money. Therefore, if it is proven that directors and officers acted in good faith, I agree that they should not be liable for their actions and courts should not review their case. Above all, I believe directors and officers should be aware and prepare for the uncertainly, make the best decision for the company success. The USBJR is a defense to breach of the statutory duty of care and diligence, and the Australian form of the rule was derived from a common law doctrine of the United States. Then, both the USBJR and ABJR are truly similar. One and the other comply that if it is prove that directors and officers acted in good faith for a proper purpose, and for the best interest of the corporation the case should not be revise and on an informed basis. Also, both versions of BJR agree that directors and officers actions are not liable if their actions or decisions was for the best interest of the company and not their personal material

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