The Business Judgment Rule as a Protective Armor for Directors’ Responsibilities: A Comparative Study Among Mauritius, United Kingdom, and United States

Abstract

Abstract The business judgment rule (BJR) is a corporate law doctrine that protects a decision of directors from fairness review by a court of law unless there is sufficient evidence that the director has breached his fiduciary duties or that the decision-making process is tainted. Given that the BJR acts as a protective armor for directors as their personal liability is not engaged for a corporate decision irrespective of its outcomes provided that some requirements are satisfied, the purpose of this paper is to critically assess whether directors of Mauritian companies are sufficiently protected and encouraged in the exercise of their duties. To achieve the research objective, the black letter research method was adopted to collect secondary data and a comparative analysis with some other countries’ rules on business judgment was conducted. A desk-based approach and content analysis were used to collect this information. The countries selected for the comparison are the United Kingdom and United States. Mauritian law does not afford protection to directors for decisions taken based on business judgment whereas this research has demonstrated that the laws of other countries being the United Kingdom and the United States as well as their judicial instances both recognize and apply the BJR.