Study Of The Business Judgment Rule

In modern corporate governance structure, the board of directors as part of the company's decision making and operations management organ, make business decisions collectively. In order to restrain the board of directors'behavior and protect company and shareholder's benefit, various countries' corporate law stipulates the directors of corporations have the duty of loyalty and the duty of care. When a director violates his duty, he must undertake the liability of compensation, in order to guarantee the director's liability, corporate laws also provide the corresponding suit way for the company and the shareholders to ensure the realization of their rights. In such legislation environment, the directors, whose decision resulted in the company losses, very possibly suffer the attack from the company or shareholders who may say that directors had violated their duty of care. It's right that by taking liability of compensation may make the directors more carefully when they make decisions, thus it is advantageous to the maintenance of the company and the shareholders'benefit. Even though, we must realize that too severe liability directors take is unfair. If the directors need to be liable for each unsuccessful decision which they approved, very few people can be willing to continue to be engaged in this work. In view of this situation, US developed Business Judgment Rule to limit the directors'liability in the long-term judicial practice. According to the Business Judgment Rule, a director need not to undertake liability for the normal management fault so long as he conforms to the certain conditions. When actual utilization, the court supposes the director conforming to the Business Judgment Rule's conditions, the party who argues that the director should take liability has the duty to present evidences to overthrow this supposition. If the party cannot do this, the court will doom the director has not violated the duty of care, also will not carry on the substantive examination to the decision, the director does not have to undertake the liability naturally. As a barrier, the Business Judgment Rule prevents the judicial examination to the management of the enterprise in a certain degree, and maintains the board of directors' independent operating rights. It has the vital significance to equally protect the benefit of various main bodies in the company.Our country's new "Corporate Law" already become effective in January 1, 2006, it's 113th, 148th, 150th, 152nd has separately stipulated directors' decision liability, the duty of care, the compensation liability as well as the company and shareholders' lawsuit method, but we can't find such regulation by which directors can exempt the liability in it. The author believed, in this environment under the new "Company Law" system, the probability of directors'liability taking for his management fault is increasing, our country should reference the idea of Business Judgment Rule to exempt the honest directors' management fault.The main structure of this paper as follows:Exordium. This chapter mainly introduces the origin base and existence significance of the Business Judgment Rule, then the necessity for our country to refer the rule.The first chapter: The outline of the Business Judgment Rule. The content includes the origin, rational, function, nature of Business Judgment Rule and the relation between the rule and the duty of care.The second chapter: The application in practice and development in theory of Business Judgment Rule in overseas. This chapter introduces Business Judgment Rule carefully with emphasis in US'S application.The third chapter: The suitable premise and tentative plan of the Business Judgment Rule in our country. This chapter firstly expounded the related basic theory and legislation present situation of the rule applying in our country, for the aim of carrying on the upholstery for the latter system designing, in this foundation, then carried on the elaboration to other countries.Conclusion. This chapter concludes the comprehensive summary to the full text.