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Analysis Of Application Of The Business Judgment Rule

Posted on:2011-07-20Degree:MasterType:Thesis
Country:ChinaCandidate:Y Z ZhaoFull Text:PDF
GTID:2166330338479549Subject:Civil and Commercial Law
Abstract/Summary:PDF Full Text Request
Business judgment rule(BJR) is a common law rule with important theoretical significance and practical value in American corporation law, and it is often used by U. S court to review whether directors fulfill their duty of care, the decision-making processes are appropriate and whether directors bear liability therefore; scholars also use it to study the fiduciary duty to enrich American corporation law, which will optimize its corporate governance system in turn. Amended Company Law of the People's Republic of China supplemented provisions concerning Directors'Duty of Diligence and Shareholders'Derivative Suits, which tightened the standard of directors'duty, meanwhile, more and more scholars proposed to introduce business judgment rule to fill up the deficiency of judicial review standard of Directors'Duty of Diligence. However, there are many disputes about its connotation, essence, theoretical basis, constitution and other aspects among scholars at present. The paper just demonstrated above-mentioned questions in accordance with domestic legislation status quo in order to put forward some suggestions about improving our corporate governance system.Part I of the paper mainly illustrated the problem of"what BJR is". First, article analyzed and compared the interpretations of BJR in American Law Institute's (ALI) proposal and Delaware case law, defining its connotation .Second, article distinguished relationship between BJR and duty of care, ascertaining its denotation, and this part was also a foreshadowing for subsequent parts. At last, article demonstrated its theoretical basis by method of Economic Analysis of Law.Partâ…¡t ook the case of America to assess the application of BJR. We chose two typical cases: McMullin v. Beran & In re CompuCom Sys. Stockholders Litig to explore three aspects of application of BJR: good faith, informed basis, and for the best interests of a corporation. In the context of tightening the standard of Directors'Fiduciary Duties, some of theorists questioned the application of BJR. In view of these facts, article reflected the three aspects of BJR and its adaptability, then overruled these opinions and emphasized the value of BJR.Partâ…¢Of paper mainly discussed the application of BJR in other countries except America, and focused our discussion on different attitudes towards applying BJR in Australia, United Kingdom and Japan. In comparison with their particular cases, we arrival at a conclusion that key factors affected the models of application of BJR are: the standard of duty of care, the degree of corresponding litigation counteracted directors, and the judicial doctrine upheld by courts to avoid second guessing business judgment.Partâ…£mainly demonstrated the inspiration that we drew from application of BJR to our corporation legislation, that is, whether we should introduce BJR and how to use the experience of other countries to improve our corporation governance. First, we argue the sense of introduce of BJR in theory, then analyzed the practical requirements of introduce of BJR viewing from Mosu case. Then in accordance with foregoing analysis we put forward some suggestions on the model of application of BJR, aspects of application of BJR, procedure and the integrity of relative counter -measures.
Keywords/Search Tags:Business Judgment Rule, Duty of Care (diligence), Judicial Review Standard
PDF Full Text Request
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