Business Judgment Rule In The Corporation Law

Business Judgment Rule is a very important legal system in the field of American corporation law. In accordance with Business Judgment Rule, A business decision is recognized as a normal one so far as directors are reasonably informed in making the business decision and make the decision with good faith and for the best interest of the corporation. When such a business decision is subject to challenge, The court will dismiss the claim without assessing the intrinsic value and the challenged decision to the corporation. Business Judgment Rule pay much attention to the normal risks which is different from the loss made by the directors who fail to perform their obligation. Hence, It can tackle the problem related to liability rises out of the decision-making. Therefore, Business Judgment Rule of the company protect the directors from doing harm to the company's interest by abusing their power. Business Judgment Rule can not only encourage directors to operate business actively, but also promote shareholders and corporate to obtain more benefits. It can block directors to abuse their power and protect shareholders from doing harm. So the Relationship between directors and shareholders and corporate will be orderly and harmony. Hence, it has important theory and practice meaning for corporate governance in China, we have to learn it well although it is difficult .First we should understand its concept and feature , it is necessary to study its development and applicability in abroad. Then we should expose the necessity and the feasibility of Business Judgment Rule in China. Because of different legal culture, we should introduce business judgment rule step by step. Fist, it is necessary to perfect all kinds of law systems which are closely related to Business Judgment Rule. Second, we will try to carry out in the joint stock companies. Finally, we will broaden the scope of the application of Business Judgment Rule and build China'law system of Business Judgment Rule.