Introducing the Business Judgment Rule in Select Countries of the Arabian Gulf

Abstract

Examining the corporate practices of the Gulf Corporation Council (GCC) member states, this paper demonstrates the imperative that GCC nations implement rational board practice models and improve current laws and regulations that pertain to corporate boards of directors. GCC member countries increasingly need to diversify revenue-generating streams; improved corporate board practices are likely to increase income from foreign corporations and investments. Rational board policies protect board members from frivolous challenges related to legal culpability because they operate on a “good faith” model, augmenting corporate growth. Providing a coherent analysis of the business judgment rule, a significant as pect of rational board practices, this paper examines how the rule has worked in the United States and provides a standard for GCC countries to emulate. Shifting domestic policies to this rational model will promote foreign investments and result in financial stability, benefits that current reform practices initiated by the GCC have not yet accomplished.