Research On The Business Judgment Rule's Application In China

Business Judgment Rule is an essential legal system in American corporation law.In accordance with Business Judgment Rule, a business decision is recognized asnormal as directors are reasonably informed while making it with good faith and forthe best interest of the corporation. When such business decision is subjected tochallenge, the court will dismiss the claim without assessing the intrinsic value andthe challenged decision to the corporation. Business Judgment Rule pays muchattention to the normal risks which are different from the loss made by the directorswhom failed to perform their obligation. Hence, it can tackle the problem related toliability rises out of the decision-making. In addition, Enterprise Business JudgmentRule protects the directors from doing harm to the company's interest by abusing theirpower. Business Judgment Rule not only encourages directors to operate businessactively, but also promotes shareholders and corporate to gain more benefits. It canblock directors to abuse their power and protects shareholders from doing harm. Sothe Relationship between directors, shareholders, and corporate will be orderly andharmony. Hence, it carries out essential theory and practice meaning for corporategovernance in China, we have to learn it well although it is complicated. First weshould understand its concept and feature, it is necessary to study its development andapplicability abroad. Then we should demonstrate the necessity and the feasibility ofBusiness Judgment Rule in China. Because of the diverse of legal culture, we shouldintroduce business judgment rule step by step. First of all, it is necessary to perfect allkinds of law systems which are closely related to Business Judgment Rule. Secondly,we will try to carry out in the joint stock companies. Lastly, we will broaden the scopeof the application of Business Judgment Rule and develop Chinese law system ofBusiness Judgment Rule.