Business Judgment Rule Research Articles

The Business Judgment Rule

The Business Judgment Rule

ESG and the Weakening Business Judgment Rule

ESG and the Weakening Business Judgment Rule

APPLICATION OF THE BUSINESS JUDGMENT RULE DOCTRINE IN INDONESIAN COMPANIES

The Business Judgment Rule Doctrine is a doctrine that provides protection to Directors who have good faith in the loss of the company. The point is that as long as the Board of Directors acts in good faith and acts solely for the benefit of the company, but it turns out that the company continues to suffer losses, it does not necessarily become the personal responsibility of the Board of Directors. Therefore, the Board of Directors cannot be held responsible for the company's losses if the Board of Directors in taking action has fulfilled all of its obligations with the principles of Good Corporate Governance (GCG). If all the obligations and GCG principles have been fulfilled, then the Board of Directors is categorized as having good faith and cannot be declared wrong. This research is normative legal research with a legal approach. The results of the author's study, in the context of the Business Judgment Rule Doctrine, the losses that occur are normal or reasonable business losses and therefore the company is responsible, and no one can be punished if there is no mistake.

PENERAPAN PRINSIP BUSINESS JUDGEMENT RULE DALAM PUTUSAN LEPAS TERKAIT TINDAK PIDANA KORUPSI DIREKTUR KORPORASI

The Business Judgment Rule is a doctrine that protects directors. Often this doctrine is also one of the reasons and protections for directors who do not want to be held criminally responsible. From this background, there are several problem points as follows: (1) How is the principle setting of the Business Judgment Rule in the Indonesian Criminal Justice System? (2) How is the application of the principle of Business Judgment Rule in the accountability of a director who commits a criminal act of corruption? (3) What is the judge's consideration in applying the principle of the Business Judgment Rule in the case of the Corruption Crime in the decision of Case Number 121 K/Pid.Sus/2020?. The approach method that the author uses is normative juridical law research. The results of the discussion, the regulation of BJR is contained in Article 97 paragraph (5) of Law no. 40 of 2007 concerning Limited Liability Companies. Analysis of Judges' Consideration of the Supreme Court on Decision No. 121 K/Pid.Sus/2020, the author agrees that the defendant Karen Agustiawan is free from all lawsuits. The author recommends to PT. Pertamina to file an arbitration claim for compensation through BANI/SIAC to ROC.Ltd Australia.Keywords : Business Judgment Rule, Corruption Crime, Decision.

Examining the Business Judgement Rule in the SOE Bank Haircut

Restructured non-performing loans by partially or fully cutting off the customer's credit were also known as a haircut. The haircut method commonly used for dealing with the customer's deb considering their financial status and ability to repay. However, the execution of a haircut policy is always faced with difficulties, mainly if the procedure is applied to state-owned banks (SOE) in Indonesia. This was due to the interpretation of the concept of Indonesian BUMN’s (state-owned enterprises) wealth which states that all wealth owned by BUMN is part of the state's wealth. A different practices applied in Malaysia which carries out privatization by separating Government Linked Companies (GLC) assets from state assets. As a result, this research examined the dimension of directors' accountability to the state's wealth concerning debt write-offs or a haircut in Indonesia and Malaysia using the Business Judgment Rule doctrine. This study used a normative juridical analysis methodology with a statutory approach in Indonesia and Malaysia. The results of this study indicates that the haircut policy is detrimental to state-owned banks, based on these findings, with certain conditions that apply, the directors can be released from the responsibility for using the Business Judgment Rule doctrine.

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

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.

The Business Judgment Rule in a Progressive Legal Perspective: Essence and Implications in Indonesia

The business judgment rule is a concept of business law to provide protection for the directors and commissioners of the company regarding liability due to decisions or policies that harm the company. This concept is important to realize creative and innovative directors in carrying out business practices. This study aims to explore the progressive legal aspects of the business judgment rule concept. This research is a normative legal research oriented to the study of the concept of business judgment rule and the theoretical study of progressive law. The primary legal materials in this study include: the 1945 Constitution of the Republic of Indonesia, the PT Law, and the POJK on the Board of Directors and Board of Commissioners of Issuers or Public Companies. Secondary legal materials include: the results of studies and research that discusses the concept of business judgment rule and progressive law. Non-legal materials include legal dictionaries. The results of the study confirm that the essence of the concept of business judgment rule is to optimize the effectiveness and efficiency of the company. This includes providing guarantees for protection and legal certainty for directors and commissioners regarding liability for company losses that can be excluded through the concept of a business judgment rule. The implications of the business judgment rule in the perspective of progressive law can be done by revising Article 97 paragraph (5) of the Limited Liability Company Law to guarantee the limits of the business judgment rule more specifically so as to ensure legal certainty, prioritizing human values ​​in progressive law as guiding values ​​in reading the formulation of Article 97 paragraph (5) PT Law, as well as the role of judges in court through their decisions to develop the concept of a business judgment rule in practice.

Doktrin Business Judgement Rule pada Bank dengan Prinsip Syariah


 The Board of Directors is one of the organs of a Limited Liability Company which has great duties, responsibilities and authority in managing the company, as well as directors of Islamic banks whose legal entity is also a Limited Liability Company. In carrying out their duties, the directors may take actions that result in losses for the company, and for this the directors must be held accountable. However, the business judgment rule doctrine suggests that the board of directors may not be held responsible for the company's losses as a result of its management as long as the board of directors is proven to have managed it in good faith and in accordance with the company's Articles of Association. For directors at Islamic banks, this doctrine is only one of the reasons that can cause directors to act professionally without fear of being wrong. In addition to the doctrine, the existence of the Sharia Supervisory Board (DPS) and commissioners is important because they participate in supervising and providing advice on the actions of the directors, and the main thing above all is the belief in the existence of divine accountability, all of which become one unit which in the end can give rise to actions that are solely for the benefit of the company and welfare.
 Keywords: Board of Directors, business judgment rule, Islamic bank

The Duty of Care and Business Judgment Rule in Austrian Company Law

The duty of care is a core instrument to incentivise managers to act diligently and in the best interest of the company. The following article highlights some key points under Austrian law and puts special emphasis on the business judgment rule, which aims to limit the liability risk of board members arising from the problem of judicial hindsight bias.

The Business Judgment Rule in the Czech Republic

Business Judgment Rule has been part of the Czech written law since 2014. Nevertheless, there are many controversies regarding its formulation as well as interpretation. The objective of this paper is to analyse the purpose of BJR and based on this to suggest pre-requisites which must be fulfilled to apply BJR. At the same time the impact of the introduction of BJR into written law is examined.

Can business judgment rule be a justification reason in corruption cases in state-owned enterprises in the form of limited liability companies?

This study aims to obtain a scientific, legal construction regarding the position of the business judgment rule in cases of corruption in a State-Owned Enterprise in the form of a Limited Liability Company. This research is normative legal and uses qualitative methods to produce descriptive data. The documents used are secondary data in the form of primary legal materials and secondary legal materials published in the public domain. The findings of this study conclude that efforts are needed to harmonize the business judgment rule doctrine with the Indonesian legal system and criminal law. The Government of Indonesia and the Legislative Body to make a derivative of Law Number 40 of 2007 concerning Limited Liability Companies or Undang-Undang Nomor 40 Tahun 2007 tentang Perseroan Terbatas (UUPT No.40/2007) which regulates more clearly and in detail related to the business judgment rule and its derivatives so that there is a sense of justice and legal certainty and legal protection for stakeholders, law enforcers and directors. Thus, the Directors of State-Owned Enterprise s(SOE) or Badan Usaha Milik Negara Pesero (BUMN) in running the company have accountability rules related to business decisions made to optimize the company's performance achievements, which in turn can have a positive impact on the Indonesian economy.

BUSINESS JUDGEMENT OF MAJORITY SHAREHOLDER RULE IN CONTEXT OF LEGAL NATURE OF NON-PUBLIC COMMERCIAL CORPORATION

Goal. In the article we research applicability of business judgement rule to actions of a majority shareholder taking in the account specificities of non-public commercial corporations. Analysis of application of the rule to a majority shareholder’s actions in view of non-public corporation’s legal nature was conducted only in the Peeples’ paper [13]. However, this analysis fails to take into the account ability of shareholders of corporations to apply informal sanctions against each other. The goal of this article is to supplement current understanding of legal nature of non-public corporation and to elaborate additional grounds for application of the rule. Inferences. In the article we confirm the conclusion that justification of application of the rule in non-public corporations has specificities derivative from the legal nature of such corporations. Besides that, we conclude that the rule’s application may depend upon ability of shareholders to deter opportunistic behavior by informal sanctions. Value. The article for the first time proves that the legal nature of non-public corporations depends not only upon trust between shareholders, but from their ability to apply informal sanctions as a mean of protection from opportunistic behavior of a counteragent. Given this, we suppose that the state’s role in protection of rights and interests of minority shareholders may be decreased.

THE BUSINESS JUDGMENT RULE (PART 1)

The office of director, by its very nature, imposes duties and responsibilities on its bearer. Taking into account the characteristics and nature of companies, it is inevitable that the scope of directors’ activities varies from company to company. A director, irrespective of the individual personality of the company, owes the company the duty of care and skill. Coupled with the duty of care and skill much emphasis, particularly in the 21st century, has been placed on the concept of corporate governance. It is within this context that the personal liability of company directors for mere errors of judgment must be considered. The object of part one of this article is to examine the characteristics of the American business judgment rule. Part 1 explores the origin of the rule and takes into account the various purposes that the rule fulfills in American law. The law relating to director liability in America is examined and the place of the business judgment rule in an American context is considered. Attention is paid to the rule’s basic requirements, the application of the rule and the subsequent consequences of the application thereof. Where possible, the requirements of the rule are illustrated through a discussion of case law. In part 2 the South African position relating to the director’s common-law duty of care and skill is considered. The Companies Act, recommendations of the King Committee, and the Department of Trade and Industry’s report on corporate lawreform are taken into account. The efficiency of the current law in South Africa is evaluated in light of the advantages and disadvantages of the importation of a foreign legal rule into South African law. In the conclusion an assessment is made of whether it is indeed desirable or necessary to import the business judgment rule into South African law.

THE BUSINESS JUDGMENT RULE (PART 2)

The business judgment rule entails that courts should not hold a director liable for a decision that produces poor results in the circumstances in which the director made the decision in good faith, with care and on a informed basis, which the directorbelieved was in the best interest of the company. This article considers the South African position relating to the director’s commonlaw duty of care and skill. The Companies Act, recommendations of the King Committee, and the Department of Trade and Industry’s report on corporate law reform are taken into account. The efficiency of the current law in South Africa is evaluated in light of the advantages and disadvantages of the importation of a foreign legal rule.A closer examination of the characteristics of the business judgment rule and the South African law relating to director liability will reveal whether it is essential to implement the rule in South Africa. In paragraph 3 a conclusion is drawn and an assessment made of whether it is indeed desirable or necessary to import the business judgment rule into South African law.

The business judgment rule under Argentine law

Los administradores societarios deben observar estrictos deberes de comportamiento y, si no lo hacen, puede imputárseles responsabilidad. La business judgment rule es una morigeración al régimen de responsabilidad y establece que los jueces no revisarán las decisiones empresarial tomadas por los administradores, quienes no podrán ser responsabilizados por ellas. Son requisitos para aplicarse esa regla: a) que la decisión esté dentro de la esfera de la competencia del administrador, no se trate de una imposición legal y no fuera un comportamiento doloso; b) que no hubiera significado la asunción de riesgos extraordinarios y c) que los managers se informaron en forma adecuada y suficiente antes de tomarla. En el derecho argentino no hay una norma que se refiera a la business judgment rule, no hay antecedentes jurisprudenciales relevantes con relación al tema y son pocos los doctrinarios que se han ocupado de abordar esta problemática. Su aplicación presupone que los administradores no actuaron con dolo ni con culpa grave. En la doctrina vernácula se discute si hay responsabilidad de los administradores por culpa leve o levísima. Un sector de los autores afirma que no, y sostiene que sólo hay responsabilidad si se actuó con dolo o culpa grave y, en este caso, la BJR es inaplicable. Nosotros sostenemos que hay responsabilidad en todos los casos en los que haya culpa, sin importar su grado, y, en este supuesto, adquiere importancia la business judgment rule, que permite sustraer a los managers de responsabilidad cuando no hubieran actuado con dolo ni culpa grave.

Odgovornost članova nadzornog odbora za štetu počinjenu dioničkom društvu

The paper systematically elaborates on the liability of supervisory board members. Although the supervisory board members do not manage the business of the company, their role is important because they make sure that the company’s business is conducted in a way that is acceptable to all stakeholders of the company. At the same time, their responsibility is based on the same principle as the responsibility of the members of the management board who manage the company's business activities. Such responsibility stems from their fundamental obligation to undertake all their activities in the company’s interest. Foremost, the paper analyses the standard of care required from the supervisory board members in performance of their duties, with special reference to the role of supervisory board members in the parent company and in the supervisory boards of subsidiaries in the concern. Subsequently, the paper analyses the effects of business judgment rule application which protects the free entrepreneurial judgment of the supervisory board members. This is followed by analysis of issues relating to the conflict of interest of the supervisory board members and the breach of the trade secret. Afterwards, the paper deals more elaborately with the request for compensation of damages to the supervisory board members. More precisely, the paper analyses issues relating to the question against which supervisory board member can such request be made, conditions for establishing their liability for damages and enforcement of such request. Paper also analyses issues pertaining to the company’s waiver of that request as well as the possibility of concluding a settlement between the company and the supervisory board member. Ultimately, the responsibility for the exploitation of influence in the company is elaborated upon.

Judicial Review of Directors' Duty of Care: A Comparison Between U.S. & China

Articles 147 and 148 of the Company Law of the People’s Republic of China (“Chinese Company Law”) establish that directors owe a duty of care to their companies. However, both of these provisions fail to explain the role of judicial review in enforcing this duty. The duty of care is a well-trodden territory in the United States, where directors’ liability is predicated on specific standards. The current American standard, adopted by many states, requires directors to “discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances.” However, both the business judgment rule and Section 102(b)(7) of the Delaware General Corporate Law (“DGCL”) shield directors from responsibility for their actions, which may weaken the impact of the duty of care requirement on director behavior. To better allocate the responsibility for directors’ violations of the duty of care and promote the corporations’ development, it is essential that Chinese company law establish a unified standard of review governing the duty of care owed by directors to companies. The majority of Chinese legal scholars agreed that a combination of subjective and objective standards would function best. Questions remain regarding how to combine such standards and implement them. In order to promote the development of China’s duty of care, these controversial issues need to be solved. This Article argues that China’s Company Law should hold a first-time violator of the duty of care liable only in cases of gross negligence but hold directors liable in the cases of ordinary negligence if they have violated the duty of care in the past.

Pertanggungjawaban Pidana Korupsi Di Sektor Badan Usaha Milik Negara

State-Owned Enterprises are legal entities created by the Government using funds taken from the State Revenue Budget (APBN) as a form of state effort to meet the needs and benefits of the Indonesian people, but in carrying out their business several problems arise related to the limitations of the flow of state finances in the finances of the Agency. State-Owned Enterprises, which often this lack of clarity causes several problems related to legal qualifications due to business actions that are not profitable for State-Owned Enterprises that lead to criminal acts of corruption. detrimental to state finances. The Law Number 40 of 2007 concerning Limited Liability Companies has clearly adopted the legal principle of Immunity Doctrine against the structure of Limited Liability Companies, namely the Business Judgemaent Rule. there are several aspects to qualify as an action in accordance with the principles of the Business Judgment Rule. State-Owned Enterprises in carrying out business are subject to the Limited Liability Company law, but in terms of finances, it refers to the regulation on State Finance, this is the point of problems in the State-Owned Enterprises sector

Implementation of Business Judgement Rules in Indonesia: Theories, Practices, and Contemporary Cases

Business judgment rule considerations were born with a background of problems where they are always blamed for losses suffered by the company, the impression that is built basically does not reflect the values ​​in the company’s business operations. This research aims to analyze how is the adoption process Business Judgement Rule in Indonesian law, and how to apply Business Judgement Rule in Indonesian. This research also intended to understand the application of the Business Judgment Rule doctrine in Indonesia. This research is normative juridical research conducted through library research and analyzed by qualitative research methods on the secondary data found. The results of this study indicate that the application of the Business Judgment Rule can provide legal protection for the board of directors for business policies taken even though the business policy results in losses for the company, as long as the business decisions are made with prudence, in good faith, and in the scope of authority and responsibility.

A Comparison of Fiduciary Duties as a Corporate Governance Mechanism in the US and China

The fiduciary duties are one of the core institutions of modern corporate governance and serve as an effective way of judicial intervention in corporate governance. In the United States, the origin, nature and content of fiduciary duties have been extensively debated, and a more complete standard of review has also been developed in judicial practice. Under US law, the standard of review on the duty of care is mainly based on the business judgment rule. The business judgment rule is often described as a legal presumption that directors and officers of a company exercise due care by acting in good faith on an informed basis and in the good faith belief that their actions are in the best interests of the company. By exploring the development history, existing problems and future development direction of US legal system of fiduciary duty and standard of review, and combining the domestic practice with the legal tradition, this paper provides a reference for the construction of legal system of fiduciary duty and standard of review in Chinese Company law.