Abstract
The business judgment rule (BJR or the Rule) is an American legal export which has become a key corporate governance tool in most leading common law jurisdictions, such as, Australia, Canada and South Africa. However, the Rule has not been formally embraced in the United Kingdom. In Zimbabwe, the Rule has traditionally been treated as a common law feature. However, section 54 of Zimbabwe's new Companies and Other Business Entities Act represents one of the significant advances in strengthening the jurisdiction's corporate governance principles by codifying the Rule. The BJR originated together with the directors' duty of care and skill. There are two main formulations of the BJR. The first one is by the Delaware Chancery Court and the second one derives from the American Law Institute's Principles of Corporate Governance. The Rule mostly applies in determining the procedural aspects of the directors' decision or the decision-making process and only in exceptional cases is it invoked to review the merits of their decision. This article seeks to critically analyse the major elements of Zimbabwe's codified BJR and to ascertain its place in the corporate governance framework. As will become clear, it will also be argued that the statutory BJR is intended for the enhancement of directorial accountability.
Highlights
It is trite that the business judgment rule (BJR or the Rule) was originally developed as a common law principle1 by American judges of the State of Delaware
Corporate law scholars are unanimous that the Rule is an American legal export
Cassim et al point out that the rule is a “cornerstone of corporate law in the [United States of America (USA)] that was adopted in Australia [and] Hong Kong but rejected in the United Kingdom5 and New
Summary
It is trite that the business judgment rule (BJR or the Rule) was originally developed as a common law principle by American judges of the State of Delaware .2. Corporate law scholars are unanimous that the Rule is an American legal export.. The BJR originated together with the directors’ duty of care and skill.. Cassim et al point out that the rule is a “cornerstone of corporate law in the [United States of America (USA)] that was adopted in Australia [and] Hong Kong but rejected in the United Kingdom and New
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