Some other difficulties are that stakeholder conflicts usually involve issues of corporate policy or strategy and the business judgment rule
developed by the courts discourages judicial inquiry into policy issues.
A second argument for the business judgment rule
is that courts are
Under a correct account of the tort analogy, the duty of care and the business judgment rule
are not antipodes of a paradox, but are complementary principles governing duty and its scope.
Delaware courts have gone to great lengths to stress that, as long as the directors acted reasonably informed and in good faith, the fact that a business decision was manifestly unreasonable does not preclude the application of the business judgment rule
Scholars have also justified the business judgment rule
by pointing to the risk of hindsight bias.
With regard to the duty of care, the presumption of the business judgment rule
(in particular the presumption that the directors acted on an informed basis) can be rebutted by showing that the directors, in a grossly negligent manner, breached their duty to inform themselves, prior to making the decision, of all material information reasonably available to them, or failed to act with requisite care on the basis of this information.
The business judgment rule
has already been criticized on a number of grounds.
Texas applies the business judgment rule
to nonprofit corporations
159) This business judgment rule
presumes that directors' decisions are made on "'an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.
The Delaware Court, in its ruling on the case, began by outlining the fundamental precepts of corporate law: (1) that directors, rather than shareholders, manage the business and affairs of the corporation, (2) that "the existence and exercise of this power carries with it certain fundamental fiduciary obligations to the corporation and its shareholders," (12) and (3) the business judgment rule
provides a protection for directors in their decision-making so long as they acted "on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company.
Deepening Insolvency and the Business Judgment Rule
value-maximizing duty, even with a strong business judgment rule
, may be