Business Judgment Rule
Categories: Board of Directors, Insurance, Regulations
The Business Judgment Rule is designed to protect board members from frivolous lawsuits or accusations. It assumes that the board always operates responsibly and with the best interest of the company at heart.
Unless the accuser can prove a major breach of a rule of conduct, courts will not review the board member's decisions. This rule was put into place with the assumption that, if you're making rules and decisions, eventually someone is bound to be mad just as a matter of course.
