Business Judgement Rule South Africa

It has been heralded by many as the key form of protection for directors and allows them to make informed judgements without the threat of liability hanging over their heads.

Business judgement rule south africa. We stated that if a director fails on this duty she may be prosecuted. For listed companies these director duties are coupled with the. The business judgment rule is implicit in the judgments of english and south african courts and the king committee has recommended its formal recognition in south africa.

It is rooted in the principle that the directors of a corporation. The disney case in re walt disney derivative litigation case no. The business judgment rule is provided for in the south african company law as part of the statement on the duty to act in the best interest of the company and the duty to act with care skill and diligence.

The business judgment rule by deshara pillay and parmi natesan senior legal and governance advisor senior governance specialist. This is the essence of the business judgement rule 1 which entered the south african legal lexicon with the arrival of the companies act 2008 the act. Are clothed with the presumption which the law accords to them of being motivated in their conduct by a bona fide regard for the interests of the corporation whose affairs.

In south africa the rule has been incorporated with the companies act 71 of 2008. Dyke michael john. He business judgment rule is a legal principle that protects directors of a company from personal liability to the company for loss incurred in business transactions that are within their authority and power to make when sufficient evidence demonstrates that the.

The south african companies act ch 71 of. Business judgement rule the key legal roles as discussed in the previous post of the governing body consist primarily of the fiduciary duty and the duty of care and skill towards the company. The business judgment rule protects directors who make informed decisions in relation to their business but which decisions do not necessarily result in the best outcome for a company.

Linda muswaka law lecturer school of postgraduate studies and research north west university south africa. So for some guidance on its potential interpretation and implementation in south africa we refer to the most notable foreign ruling usa delaware in terms of the business judgement rule. Therefore the rule has been codified in numerous countries all over the world.