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Directors’ Business Judgment and the Courts Public Lecture
Thu. 27 April 2017, 5:00 pm – 6:30 pm ACST
Research Unit on Regulation of Corporations, Insolvency and Taxation (ROCIT)
presents a public lecture on
Directors’ Business Judgment and the Courts
Directors of large public companies take decisions that can impact significantly on companies, shareholders, other stakeholders, and society, sometimes causing serious economic loss and social harm, as illustrated for example by the global financial crisis or the Deepwater Horizon oil spill. Yet it is rare for directors to be sued by their companies or shareholders, or subjected to regulatory sanctions for decisions that cause harm. This has caused widespread public dismay, rendering the question of the appropriate degree of director accountability a matter of public interest and a key policy concern. A key reason for directors’ lack of accountability is that the courts in England and Wales have asserted that directors’ business judgments should be immune from judicial review. In the US and Australia directors’ decisions are protected by the business judgment rule. Classifying a decision as a business judgment consequently provides directors with a powerful shield from legal accountability. It is therefore critical to understand when and why decisions are categorised as business judgments, and so immune from review, and when they are not so categorised and thus found to be challengeable. This paper explores the parameters of the concept of a business judgment, by examining how, if at all, the courts of England, Australia and the US (primarily Delaware) have defined directors' business judgment. It considers what a judgment is, and what kinds of decisions are business judgments; is judgment an event or a process? is it possible to categorise different types of decisions involving business judgment? What kinds of decisions are not deferred to and why? What does it mean to designate something as a business judgment?
Presented by Professor Joan Loughrey
Professor Joan Loughrey studied Law at Somerville College, University of Oxford, where she was awarded a College Exhibition. After obtaining a Merit in her Law Society Finals, she was admitted as a solicitor of the High Court of England and Wales and later of the Supreme Court of Hong Kong. She practised as a solicitor in both jurisdictions before entering academia where she obtained a Merit in the Postgraduate Certificate in Higher Education. She has previously been a Parsons Visitor at the University of Sydney.