Business Judgment Rule

Business Judgment Rule
A regulation that helps to make sure a corporation’s board of directors is protected from misleading allegations about the way it conducts business. Unless it is apparent that the board of directors has blatantly violated some major rule of conduct, the courts will not review or question its decisions or dealings.

The reason for this rule is to acknowledge that the daily operation of a business can be innately risky and controversial. Therefore, the board of directors should be allowed to make decisions without fear of being prosecuted. The business judgment rule further assumes that it is unfair to expect those managing a company to make perfect decisions all the time. As long as the courts believe that the board of directors acted rationally in a particular situation, no further action will taken against them.


Investment dictionary. . 2012.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • business judgment rule — n: a rule of law that provides corporate immunity to directors of corporations protecting them from liability for the consequences of informed decisions made in good faith Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. business… …   Law dictionary

  • Business judgment rule — The business judgment rule is an American case law derived concept in Corporations law whereby the directors of a corporation . . . are clothed with [the] presumption, which the law accords to them, of being [motivated] in their conduct by a bona …   Wikipedia

  • Business Judgement Rule — Die Business Judgement Rule ist im deutschen Gesellschaftsrecht ein Teil der Organhaftung, wonach der Vorstand oder Aufsichtsrat für begangene schuldhafte Pflichtverletzungen persönlich haftet und entstandene Schäden ersetzen muss.… …   Deutsch Wikipedia

  • business — Employment, occupation, profession, or commercial activity engaged in for gain or livelihood. Activity or enterprise for gain, benefit, advantage or livelihood. Union League Club v. Johnson, 18 Cal.2d 275, 108 P.2d 487, 490. Enterprise in which… …   Black's law dictionary

  • business — Employment, occupation, profession, or commercial activity engaged in for gain or livelihood. Activity or enterprise for gain, benefit, advantage or livelihood. Union League Club v. Johnson, 18 Cal.2d 275, 108 P.2d 487, 490. Enterprise in which… …   Black's law dictionary

  • Business — For other uses, see Business (disambiguation). Firm redirects here. For other uses, see The Firm …   Wikipedia

  • judgment — judg·ment also judge·ment / jəj mənt/ n 1 a: a formal decision or determination on a matter or case by a court; esp: final judgment in this entry compare dictum, disposition …   Law dictionary

  • Business rules engine — A business rules engine is a software system that executes one or more business rules in a runtime production environment. The rules might come from legal regulation ( An employee can be fired for any reason or no reason but not for an illegal… …   Wikipedia

  • Duty of care (business associations) — Companies law Company  …   Wikipedia

  • Types of business entity — Companies law Company  …   Wikipedia

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”