Directors' duties : negligence and the business judgment rule

Abstract

The business judgment rule originated in the United States as a common-law rule relating to directors' duty of care and skill. After considerable deliberation, going as far back as 1989, a statutory version of the rule has now been adopted in Australia (as s 180(2) of the Corporations Act 2001; see A Finlay 'CLERP: Non-Executive Directors' Duty of Care, Monitoring and the Business Judgment Rule' (1999) 27 Australian Business LR 98). In South Africa the King Reports in 1994 and 2002 (published by the Institute of Directors in Southern Africa) recommended that the Standing Advisory Committee on Company Law investigate the necessity for the business judgment rule in South Africa. Now, and contrary to the views of most South African legal authors, a statutory version of the rule has been included in of the Companies Bill of 2007 (as cl 91(2)).