The business judgment rule is a United States case law-derived concept in corporations law whereby the "directors of a corporation . . . are clothed with presumption, which the law accords to them, of being in their conduct by a bona fide regard for the interests of the corporation whose affairs the stockholders have committed to their charge".
To challenge the actions of a corporation's board of directors, a plaintiff assumes "the burden of providing evidence that directors, in reaching their challenged decision, breached any one of the triads of their fiduciary duty — good faith, loyalty, or due care". Failing to do so, a plaintiff "is not entitled to any remedy unless the transaction constitutes waste . . . the exchange was so one-sided that no business person of ordinary, sound judgment could conclude that the corporation has received adequate consideration".
Read more about Business Judgment Rule: Basis, Duty of Care and Duty of Loyalty, Standard of Review, Rationale
Famous quotes containing the words business, judgment and/or rule:
“Young men of the fairest promise, who begin life upon our shores, inflated by the mountain winds, shined upon by all the stars of God, find the earth below not in unison with these,—but are hindered from action by the disgust which the principles on which business is managed inspire, and turn drudges, or die of disgust,—some of them suicides.”
—Ralph Waldo Emerson (1803–1882)
“If you were born to honor, show it now;
If put upon you, make the judgment good
That thought you worthy of it.”
—William Shakespeare (1564–1616)
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