Research On Modified Business Judgment Rule

Business Judgment Rules means a threshold or safe harbor to protect the directors of corporation from private liability after they make a business decision,except that plaintiff can point out the evidence to persuade judges there is “reasonable doubt” that the directors break their duty of care.In other words,courts presume that in making a business decision the directors of a corporation acted in the best interest of the corporation and shareholds(good faith),so,if the plaintiff fails to prove some facts,for instance,directors are not disinterested or reasonably informed,the business judgment will be respected by the courts.Business Judgment Rule pays much attention to the complexity and risks of business activities.It not only can balance the risks and benefits between the directors,shareholders and the corporation,but also can protect the directors' freedom of decision making.Meanwhile,a hostile takeover has great impact on the directors of the target corporation because the directors will probably lose their job or reputation once the takeover is consummated.Thus,these directors often take advantage of their authority and try every defensive tactic to defeat the takeover.In order to test whether the directors violate Fiduciary Duty by taking those anti-takeover activities,Delaware courts have reviewed defensive measures implemented by target boards with enhanced scrutiny to judgment if they violate fiduciary duty.This enhanced scrutiny--judicial standards of review in anti-takeover context--includes business judgment rule,etc.In other words,U.S.common law applies the Modified Business Judgment Rule-develops a series of principles on traditional Business Judgment Rule,which include Primary Purpose Test,Proportionality Test,Value Maximization Test,Fair Auctioneer Test,etc.in protecting and upholding the validity of aggressive defensive measures.The paper makes certain analysis against the connotation of Modified Business Judgment Rule as well as the application in the field of antitakeover by means of some leading cases.It suggests our country relevant law to absorb some useful component of Business Judgment Rule and strengthen the prevention of antitakeover decision abused by corporation directors.Besides to the Preface and the Conclusion parts,the paper consists of three Parties their contents are as follows:Part One is mainly about the initial situations and validity of BJR,along with its elements,review standards,nature,operation of the process and the relationship between BJR and Fiduciary Duty.Part two is the most important part in my paper.In that part,paper is mainly about the initial situations of anti-takeover activities,along with its concept and classification.The most of anti-takeover activities are business decisions that could be tested by BJR.And then,by some leading cases,just as Unocal Corp.v.Mesa Petroleum Co.,Revlon v.MacAndrews & Forbes Holdings,Paramount v.Time,etc.,paper showed(1)how the business judgment rule could be applied to directors' actions in implementing takeover defenses,(2)what is the operation process of modified Business Judgment Rule,and(3)what is change for modified Business Judgment Rule than traditional Business Judgment Rule.Part three is mainly about the necessity and feasibility of use modified Business Judgment Rule in my country's directors Accountability institution.