Abstract

In Delaware, in the United States, the Business Judgment Rule (bjr) has been described as “a presumption that in making a business decision the directors of a company acted on an informed basis, in good faith and in the honest belief that the action taken was in the best interest of the company”. The party seeking to challenge the decision must rebut the application of that presumption. In the event that the party achieves rebut, the burden of proof will be reversed, so that it will be the administrators who must prove the “entire fairness” of the transaction. This article also discusses three justifications for bjr, like some criticism of the rule based on or associated with a cost-benefit analysis. Furthermore, this article focuses on the application of bjr on banking issues, particularly in cases involving mergers and acquisitions (M & A). Keywords author: Good business judgment rule, directors, board of directors, fiduciary duties, due diligence, loyalty, good faith, secondary duties, directors’ liability, actions against directors, mergers and acquisitions, hostile takeovers, banks, banking law, bank managers.

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