The Business Judgment Rule In The Company Law Research

The prosperity of business industry has caused the separation of company ownership and management rights. The balance between shareholders and directors has become the key issue to corporation management. The directors have been granted more and more privilege during the transfer of rights from general meeting of shareholders to board of directors. Therefore the abuse of rights has been significantly increased. Accordingly emphasizing the accountability of directors has becoming a common trend of corporation legislation in many countries. However, the business world has its own characteristics——high benefits always accompany high risks and the business opportunities are usually disappear quickly. If we only keep an eye on accounting directors, they will be reluctant to take any risk in the process of decisions making, which actually harms the interests of all the shareholders and the corporation. So the law should protect the directors’interests based on reasonable business judge. Therefore the Business Judgment Rule (BJR) has been invented based on the Case Law in United States to handle the above situation.This paper introduces BJR in four aspects. Firstly, since BJR is based on Case Law, its development history including seven law cases have been described in details. Secondly, the differences and associations between BJR and The Directors’Duty of Care have been explored and discussed. And then, the essential elements of BJR have been summarized. At last, the possibility of introducing BJR to China and how it can be applied in China have been discoursed.All in all, in this paper, BJR has been introduced in different aspects and several cases have been discussed which should be helpful and practical to those readers who is also studying on BJR.