On The Principle Of Business Judgment Of The Directors

The Business Judgment Rule of board directors is a principle of case law which is gradually summarized in the American long-term judicial practice. In accordance with the Business Judgment Rule, board directors will not assume the responsibilities for the compensation of losses caused against the company due to the business decision-making and the business decisions will not be considered to be invalid or dismissed only due to the existing negligence as well. The Business Judgment Rule of board directors, which aims at its pursuit of balance between the protection of the business decision-making rights enjoyed by board directors and the maintenance of the right and interests of the company, draws its attention to the normal risks in commercial activities and attempts to establish a legal mechanism in which board directors can make decisions bravely for the interests of the company. Therefore, the principle plays a crucial role in the American company law and serves as a valuable reference for the establishment of board directors' system or even company system in China. Therefore, the study of Business Judgment Rule is significant and valuable both in theory and in practice.However, up to date, there is few scholars have made systematic studies in this principle. On the basis of the contradiction between the protection of the business decision-making right enjoyed by board directors and the maintenance of interests of company and with the reference of academic achievements in American company system and practical experience in American corporation governance, the thesis systematically discusses the basic problems, theoretical foundations, application factors as well as the relationship with related legal mechanisms, and aims at providing a model or some references for the theoretic development and legislative perfection of board directors' system in our country.In addition to the preface, this thesis is divided into five parts:Part I: The Basic Frame of the Business Judgment Rule of Board Directors. Since there is no unified or definite understanding of the meaning of Business Judgment Rule in the theoretical profession of China, and this kind of cases rarely exist in the judicial practice, this thesis makes a summary of the main problems of Business Judgment Rule, including the meaning, the history introduction and the functions of Business Judgment Rule, on the basis of both related cases in America and viewpoints of scholars.Part II: The Theoretical Foundation of the Business Judgment Rule of Board Directors. According to the analysis of the theoretical foundation and its own value, this part aims at its pursuit of balance between the board directors' liabilities system and the protection mechanism of board directors' interests, that is to say, not only protecting the company shareholder's benefits, but also attempting to maintain the enthusiasm and innovation of board directors in business management.Part III: Main Factors of the Business Judgment Rule of Board Directors. To streamline the application factors of the Business Judgment Rule is significant for its introduction and building in our country. Following the clue of Principles of Corporate Governance: Analysis and Recommendation which is made by American Law Institute, this part analyses the viewpoints of Chinese and foreign scholars on this principle, and summarized the application factors of the Business Judgment Rule, including a business judgment matter, lack of conflict of interests, good faith, on informed basis and in accordance with the best benefits of corporations.Part IV: The Relationship between the Business Judgment Rule and Related Legal Mechanisms. The Business Judgment Rule is closely related to quite a few important legal mechanisms in American company law. This part focuses on the relations between the principle and the duty of care, duty of loyalty of board directors. And then, this part discusses the relationship between this principle and the responsibilities of evidence-presenting on the basis of analyzing the process, content and standard of the Business Judgment Rule.Part V: The Business Judgment Rule and the Improvement of the Company Law of China. The purpose of studying foreign legal systems is to provide experience for the improvement of China's related laws. Hence, based on the practical circumstances of China, this part analyzes the practical significance for China to absorb the Business Judgment Rule and makes some constructive proposals for the introduction means, legislation principles and the building of concrete system of the Business Judgment Rule in China.