Business Judgement Ruleas Defined Plst 350 Libert
your thread must be supported with at least 1 scholarly resource (cited in current Bluebook format). You must also reply to at least 2 classmates’ threads with constructive feedback that forwards the academic conversation. Each reply must be at least 150 words.
Student #1 JB
DB 4; Business Judgement Rule
As defined within our text, there are four elements that protects a director/officer from liability for business actions and/or decisions that they have conducted: 1) act in good faith; 2) where the director/officer is not related to the subject of the business judgement; 3) where the director/officer is notified with respect to the issue of the business judgement to the extent that the director reasonably believes to be apposite under the conditions; and 4) where the director/officer sensibly believes that the business judgment in question is in the best interests of the corporation. Angela Schneeman, The Law of Corporations and Other Business Organizations 9-2a (6th ed. 2006). Considering these four factors in determining the status of liability for corporate directors and officers, I believe that the business judgment rule is fair and just. The purpose of a business corporation, just like any other form of business entity, is to allow a party to make an appropriate choice of which type of business organization to begin in relation to each type’s advantageous and disadvantageous characteristics. In other words, it is to invoke freedom through individual choice. In regard to any form of business entity chosen, I do not believe that the existence of the business judgment rule does not offer anything particularly positive over any of the other business entities. For example, if I start a sole proprietorship for my restaurant and I hire a store manager to supervise the store and its employees during my absent, then I will not punish him for a poor outcome resulting from one of his decisions or actions; as long as he was acting in good faith, not practicing negligence, and upheld my business’ best interest. In a sense, this is exactly what the business judgment rule is doing—it is offering a blanket of protection in relation to unfavorable outcomes of business decisions. I believe with certainty that the business judgment rule is consistent with a Christian worldview. The Holy Bible states, “The integrity of the upright guides them, but the crookedness of the treacherous destroys them.” Proverbs 11:3 (English Standard Version). This excerpt can be used in many applications, but it fits so well with this scenario. Directors and officers who act with good faith and integrity will be shepherded through and absolved of liability, but those who act negligently shall be punished.
The business judgment rule does not seem too lenient on corporate managers, as it protects from liability only in circumstances where decisions are made in good faith, without personal interest, and in the best interest of the corporation. Angela Schneeman, The Law of Corporations and Other Business Organizations 358 (6th ed. 2012). In matters that a decision was made with blatant disregard for negative outcomes for the corporation, this rule would not protect against liability. Id.
A corporation is a property belonging to its shareholders, whose function is to maximize the return to those shareholders. Rodney D. Chrisman, The Purpose of the Corporation learn.liberty.edu (February 9, 2018). Any corporate actions or decisions should be made with the ultimate end goal of building the wealth of the corporation overall. Id.
The business judgment rule is consistent with a Christian worldview in that it expects well-informed decisions to be made of good faith and in the best interests of the corporation. Angela Schneeman, The Law of Corporations and Other Business Organizations 358 (6th ed. 2012). A reference in this week’s presentation to Exodus 20:16 “Thou shalt not steal” makes the point that a corporation is the property of its shareholders and therefore wealth should not be stolen from it. When officers of the corporation are acting with the end goal of building gains for the shareholders and the health of the corporation, it fits with a biblical view of how property should be handled.