The Importance of the Business Judgment Rule

Abstract

Anyone who has had the opportunity to teach corporate law understands how difficult it is to provide a compelling explanation of why the business judgment rule (the "Rule") is so important. To provide a better explanation of why this is so, this Article takes the approach that the Aronson formulation of the Rule is not the proper starting place. Instead, this Article begins by starting with a close read of two cases that initiated the application of the Rule under Delaware law: the Chancery Court and Supreme Court opinions in Bodell v. General Gas & Electric. By taking this approach, the following insights into the Rule-which are not as readily apparent when the starting point is Aronson-are discovered. First, without the Rule, the raw power of equity could conceivably require all challenged board of directors ("Board") decisions to undergo an entire fairness review. The Rule is the tool used by a court to restrain itself from persistently implementing such a review. This is the most important function of the Rule. Second, as a result of the need to restrain equity, there

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“…50 Sebagaimana diketahui, prinsip business judgment rule merupakan pelindung bagi Direksi yang mengambil dan melaksanakan keputusan bisnis dengan itikad baik, tanpa benturan kepentingan, demi kepentingan terbaik bagi perseroan terbatas dan telah melakukan pencegahan bagi berlanjutnya kerugian jika ada pada perseroan terbatas. 51 Meski demikian, Direksi (management) dan Dewan Komisaris sebagai pengawas (supervisory board) tetap mempunyai kewenangan untuk bertindak dan mengambil keputusan. Selain itu, hukum Belanda juga tidak mengenal duty of loyality baik bagi Direksi maupun Komisaris.…”

Implementation of the Equity-based Trust in the State-Owned Enterprises in Indonesia

“…This trust occurs if the party who initially controls and owns an object or settlor then surrenders the ownership of the object to another party in form of trustee for the benefit of a third party as beneficiary, even though the trustee becomes the legal owner of the object, the trustee is only in the management's position, manager and storage of the item. Meanwhile, benefits or uses must be given to third parties as beneficiary (Prasetio, 2014;Johnson, 2005;Sharfman, 2017;Gurrea-Martínez, 2018;Engert and Goldlücke, 2017;;Onyshchuk et al, 2020).…”

Reasons of Application of the Business Judgment Rule

“…Greta to teisėjai kasdienėje veikloje retai turi galimybę spręsti klausimus, susijusius su įmonių veikla, jų valdymu 63 . Be to, daugelis teisėjų savo tarnybą pradeda eiti turėdami ribotą patirtį įmonių valdymo srityje ir atitinkamai turi menką suinteresuotumą gilinti žinias šioje srityje 64 . Išvadas dėl teisėjų ribotos patirties sprendžiant su įmonių valdymu susijusius klausimus paremia ir Lietuvos Aukščiausiojo Teismo Civilinių bylų skyriaus teisėjų darbinės patirties analizė.…”