AN ANALYSIS OF THE DIRECTORS’ DECISION-MAKING FUNCTION THROUGH THE LENS OF THE BUSINESS-JUDGMENT RULE

Authors

  • Jan-Louis van Tonder

DOI:

https://doi.org/10.17159/obiter.v37i3.11521

Keywords:

standard of conduct, director, decision-making function, business-judgment rule, best interests of the company, duty of care, skill, diligence

Abstract

The main purpose of this article is to examine the standard of conduct required from a director in the exercise of his decision-making function, through the lens of the business-judgment rule. The business-judgment rule provides the circumstances in which the duty to act in the best interests of the company and the duty of care, skill and diligence will be satisfied by a director. In order to achieve the stated goal the board’s statutory managerial authority, the standard of director’s conduct required to discharge the duty of care, skill and diligence as provided for in section 76(3)(c), and the features and functions of the business-judgment rule will also be examined. Section 5(2) of the Act provides that, to the extent appropriate, a court interpreting or applying the provisions of the Act may consider foreign-company law. This is complementary to section 5(1) which directs that the Act must be interpreted and applied in a manner that gives effect to the purpose of section 7. The article will refer to the highly developed corporate law in the State of Delaware to assist the research in examining the content and meaning of the decision-making function as a standard of director’s conduct. For this reason, the corporate legislative framework of the State of Delaware will also be discussed.

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Published

20-12-2016

How to Cite

Jan-Louis van Tonder. (2016). AN ANALYSIS OF THE DIRECTORS’ DECISION-MAKING FUNCTION THROUGH THE LENS OF THE BUSINESS-JUDGMENT RULE. Obiter, 37(3). https://doi.org/10.17159/obiter.v37i3.11521

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