Florida International University Board Directors Business Discussion

write 2 replies for those students

I agree with the business judgment rule due to it providing “a director of a corporation immunity from liability when a plaintiff sues on grounds that the
director violated the duty of care…” If evidence is shown, an investigation is conducted, and it is proven via facts that members of a firm made a choice
based on the interests of the shareholders and the business, then I abide by the law’s general principles. They cannot be held liable unless the evidence
establishes that they acted morally, since someone else would have taken the same course of action in such location. However, I also believe that there
must be a very thorough and detailed investigation before the Business Judgement Rules apply. Which brings me to my decision on why I agree with
the U.S. rule and wouldn’t change anything about it.
The United States and Germany both have the same concept of the business decision principle. In the US, a legal principle known as the “Business
Judgment Rule” exempts company officials and agents from corporate liability for losses incurred in business transactions under their authority and
powers to do so if sufficient evidence shows that transactions have been made in good faith. It guarantees that the boss will act in the best interests of
the entire business rather than just his own. Prudence indicates that the director will always act in accordance with fair conclusions and evidence and
that he cannot take any decisive action prior to conducting an appropriate investigation that demonstrates his due diligence.
The German Company Decision Rule states the same maxim, saying that under German law, it is a known basic concept that it requires a wider
capacity to be able to operate the firm efficiently by the management board. The courts determined, in essence, that a board member should only rely
on the Law of Business Judgment if he or she has made every effort to clarify the truth in order to reach an informed decision.
References
Legal Information Institute. (n.d.). Business judgment rule. Legal Information Institute. Retrieved November 4, 2022, from
https://www.law.cornell.edu/wex/business_judgment_rule#:~:text=The%20business%20judgment%20rule%20provides, the%20parameters%20of%20
the%20rule.I agree with the U.S. rule part that states that the board of directors cannot be prosecuted for their decisions since doing business requires some level
of riskiness. I believe that is good because without taking risks there’s no chance to grow. I also read on the Canadian Business Judgment Rule and it is
very similar to the U.S. one. The Canadian rule also has similar exceptions such as being liable if fraud is found or if there’s a conflict of interest.
Personally, I would not change anything because if I was the leader of a company, I would want to worry about shareholders going after me because
they opposed my decision and of course my decision would be reasonable and backed up by analysis since I would want the best for my company.
Additionally, the rule also states that I must act rationally and in good faith or else the rule does not apply. Finally, I find those aspects to be effective
since it both prevents executives from making fraudulent decisions but also encourages them to take risks that could lead to growth.
References:
https://www.mondaq.com/canada/directors-and-officers/42880/the-canadian-courts-perspective-on-the-business-judgment-rule >>
https://www.investopedia.com/terms/b/businessjudgmentrule.asp#:~:text=Example%20of%20the%20Business%20Judgment%20Rule&text=The%20
board%20decides%20that%20discontinuing, are%20adversely%20affected%20by%20ite>