Original language | English |
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Title of host publication | Encyclopedia of Sustainable Management |
Editors | Samuel Idowu, René Schmidpeter, Nicholas Capaldi, Liangrong Zu, Mara Del Baldo, Rute Abreu |
Publisher | Springer |
Pages | 1-4 |
Number of pages | 4 |
ISBN (Electronic) | 9783030020064 |
Publication status | Published - 2023 |
Abstract
The business judgment rule is a rule in corporate law which provides directors of a business corporation a defense in lawsuits where corporate decisions have been challenged in the courts. The rule provides a defense where directors can demonstrate that they have acted in good faith. The rule is based on the general corporate law principle that the courts will not impose liability where a corporate decision has had negative consequences for the company provided that the directors have acted in the best interests of the company when taking those decisions (Arsht 1979; Sheehy and Feaver 2014).