Business Judgment Rule: Theory And Operation

Business Judgment Rule (BJR) features the American Corporate Law and its director's duties, with which this article started. It stemmed from the directors'duty of care bur never overlapped the latter completely. As judicial rule of inspection and investigation, judges evaluate ex post the action and conduct of directors by which they exercise the power of a corporation. If the presumption of Business Judgment rule is not questioned persuasively by a plaintiff, the rule releases the director and the decision he made or joined to make. Therefore we can regard this rule as a safe harbor for directors in the exercise of his decision-making and monitoring role.The main methodologies used here include Economic Analysis of Law, the Legal Value Analysis, the Historical Analysis under Sociological Analysis of Law as well as ComparativeLaw (By comparing the relations and differences between the Business Judgment Rule andsimilar legal concepts like Directors'Duty of Care and Loyalty). Through these useful methodologies, conduct a deep research on the Rule.This article is composed of six chapters.The first Chapter focuses on the fundamental conception and framework of Business Judgment Rule .While tracing back the history of the Business Judgment Rule, we can find there is a lot of relationship with the duty of care, so the theories of duty of care is the cut-in point of the Business Judgment Rule.In the second Chapter, the author discusses the independent functions and values of the Business Judgment Rule, and focuses on three aspects: exclusion of judicial inspection and investigation; alleviating the duty of care and the distribution of onus probandi.The jurisprudence analysis and economic analysis of Business Judgment Rule are the main content of Chapter three. After these analysis, the theoretic and economic background of Business Judgment Rule can been clarified.Chapter four concentrates on the structures of the Business Judgment Rule. there are six different elements of Business Judgment Rule. In author's opinion, three of them is active: business judgment; good faith; for the best interests of a corporation. The other three elements are negative: no conflict of interests; independence and to be informed.Chapter five is The Application of Business Judgment Rule in All American Corporation sub fields. In this part, a large number of cases are introduced to explain how American Courts in different jurisdiction apply this useful rule in the corporation sub fields like corporation management, corporation takeovers and anti-takeovers,the derivative suits and other fields of this kind, based on which the author summarizes some features of the rule's application.In the last part, Chapter six, author refers to the Use for Reference of Ideas in the Business Judgment Rule to China. the Rationality of the Ideas in the Business Judgment Rule and its General Significance. Based on the previous jurisprudential analysis to the rule, abstract the several rational ideas bred in the Business Judgment Rule and summarize their general significance inperfecting the corporation legal system. Based on the introduction on the legal and political environment at present in China to make reference to the ideas of the Rule, raise step by step measures and pointing out the direction for future legislation.