On The Business Judgment Rule

Business judgment rule (the so-called BJR) is originated from American case law. As judicial review standard, it keeps the court hands-off the corporation's inner issues and protect the directors and senior managers who do business judgment with good faith, thus to encourage them make profits for corporation through eliminating the risk of making business judgment. Based on the typical director primacy theory in American corporation governance, business judgment prevailed everywhere in American different states'company law. On the aspect of balancing different profits in corporation it plays a dynamic role, especially it has unique importance in improving directors'duty of care. Under the circumstances of convergence of national corporation law, it is significant to study business judgment rule for improving China's corporation law system especially for consummating director's duty of careThe thesis mainly adopts case study method, comparative methodology and systematic methodology. It begins with the fundamental theory of business judgment rule and then specifically discusses the relationships between the rule and director's duty of fiduciary. Furthermore the thesis analysis the rule's transplanting and practicing situations in other countries, and based that it concluded the introduction of business judgment rule in China.Except introduction and conclusion this thesis concludes four parts:The first part explains the fundamental theory of business judgment rule. Firstly by comparing and analyzing the different descriptions of business judgment rule in Delaware mode, ALI mode and MBCA mode the thesis answers what the rule is and then concludes the rule's legal characters and sense. Secondly it analysis the application factors of business judgment rule.The second part is about the relationship between business judgment and directors'duty of fiduciary. At first with discussing the relations between the rule and director's duty of care it comes out that the centralized difference between them is the duty of care is the standard of conduct expected of directors in their decision making, and the business judgment rule is the standard of review that applied by court. Secondly it is about the relation between the rule and duty of loyalty. On the one hand, if the business judgment is applied the duty of loyalty should be satisfied first; on the other hand, the fair test as duty of loyalty's key standard has pretty close relation with business judgment rule. They exclude each other substantially and complement procedurally.The third part put the vision on the typical countries which transplanted business judgment rule successfully. First the paper picks Australia which introduced the rule in statute law and then explains the disputes about whether put the business judgment rule in statutory. Second it takes Japan as an example to discusses Japanese director's duty exemption system and the practical experiences which is from courts'application with the rule. Although Japan has not introduced the rule in statute law but improved it in case law, it comes into its own special mode. Last this part chooses another typical common law country: British. It explains the improvements from case law to statute law of director's duty system in Britain. On the basis of consummated system and advanced case law tradition, the business judgment rule has no room in British.The forth part explains the issues of introducing business judgment rule in China. At first it discusses the different points in introducing the rule and comes out it is reasonable and feasible in leading the rule in China's company law. By supporting that it discusses from the aspects of the utilities of business judgment rule, the transplant of law and the openness of corporation law. Lastly this part mentions the suggestions in introducing business judgment rule in China.