Business Judgment Rule New Jersey

In this case the business judgment rule may be your best tool as an association.

Business judgment rule new jersey. And 2 the plaintiff s efforts to secure from the corporate directors and other. While certain statutory requirements in addition to the requirements imposed by the bylaws are to be followed by the board in making decisions the business judgment rule the bjr applies to limit the personal liability of the board members. The business judgment rule definition has traditionally been defined as protecting a corporation s non interested officers and directors from personal liability for their actions in operating the corporation in the honest exercise of their business judgment even if their decisions are wrong unwise or negligent.

And the business judgment rule holds that a court will defer to the decision of the board so long as upon review the court determined that the decision was made in good faith and in exercise of honest judgment in the lawful and legitimate furtherance of the corporate purposes. The business judgment rule is one of the primary statutes regulating operation of cooperative housing corporations in new jersey and other states. The definition of the business judgment rule in traditional texas jurisprudence is particularly strong and the defense has been held to be available only if the challenged action.

The appellate division of new jersey s superior court explained the business judgment rule this way. The rule may be enacted when the association their board of directors or trustees makes a board decision which cannot be changed or over ruled by the court based upon what we would call the. In randolph new jersey explains how the business judgment rule can be utilized.

The bjr applies to homeowners and condominium associations. Jennifer alexander esq a shareholder at griffin alexander p c. In new jersey such actions are governed by rule 4 32 3 of the new jersey rules of court which requires that such an action be initiated by a verified complaint alleging 1 that the plaintiff was a stockholder at the time of the transaction complained of.

Business judgment rule is to protect corporate directors from personal liability that would result from second guessing undertaken by courts with the benefit of 20 20 hindsight and to promote the free exercise of managerial power. According to the federation of new york housing cooperatives and condominiums fnyhc under the reasonableness standard the board had to prove that it was acting in a reasonable manner. Under the business judgment rule there is a rebuttable presumption that good faith decisions of a corporate board of directors are valid and not subject to attack by shareholders absent fraud self dealing or unconscionable conduct.

The business judgment rule protects a fiduciary from being questioned or second guessed on conduct of corporate affairs except in instances of fraud self dealing or unconscionable conduct.