The Business Judgment Rule In The Company Law

The Business Judgment Rule in the Company Law is a rule that was set up gradually in the judicatory practice in the USA court. The central theme of it is to seek the balance between protecting the business decision of the directors and protecting the interest of the company and the shareholders.Judging from the other countries experience such as the USA, how to reasonably judge and define the obligation and the responsibility of the directors,and how to take effective measures so as to relieve the unnecessary responsibility burdens of the managerial staff, take a very important role in the Company Law theories. This article tries to explain the business judgment rule, by initially studying the theoretical foundation, the value basis, the functions and the construction parts of it, and the necessity and the possibility of introduction of the rule into China, so as to strengthen the obligation and the responsibility system of the directors, to balance the multiple parties interests among the company, the shareholders and the managerial staff, and to help to improve the modern company managing mechanism.The are five parts besides the foreword and the summary.Partâ… : The basic theory of the business judgment rule. As there is no common and authoritative definition of the business judgment rule, and in the daily practice there are few relative cases, this article mainly combines the actual cases in the USA court and the ideas of the scholars, illustrates and summarizes the basic theoretical problems of the business judgment rule by explaining the concept, the theoretical foundation, the value basis of the business judgment rule, and the relations between the business judgment rule and the directors obligations, so as to give out a panorama introduction of the business judgment rule.Partâ…¡: The function of the business judgment rule. The function of the business judgment rule mainly relates to the instrumental function of it in solving specific legal disputes. The reflection of business judgment rule helps us to understand more of the value and the realistic meaning of the business judgment rule. The auther discusses the problem on three aspects: exclusion of judicial inspection and investigation; alleviating the duty of care and the distribution of onus probandi.Partâ…¢:The structueres of the business judgment rule. Understanding the structueres of the business judgment rule is very important. The author thinks there are the following structueres by using the reference of the foreign lawful theories: it is the fact that the business judgment actions are carried out, the directors who make the business judgments are honest, there are no interest dispute between the decision-maker director and the judgment, there are good reason to trust that these judgments are made based on enough information, and there are good reason to believe that the judgments are for the company's best interests.Partâ…£:The factors excluding appling the bussiness judgment rule. After demonstrating the structueres of the business judgment rule,the author discusses the factors excluding appling the business judgment rule set up in the American case laws from the negative sides,such as Egregious Conduct, Fraud ,Illegality and ect.Partâ…¤: The thinking of introduction the Business judgment rule into China. The aim to study the foreign law is to provide the experience to improve our own relative laws. Hence, this part starts from our own situation, analyses the necessity of introduction the business judgment rule, and gives some constructive ideas in the mode of introducing the business judgment rule and the relative lawful problems.