CORPORATE GOVERNANCE

This study Material is Prepared by

Dr. Pradip Kumar Das, Associate Professor,
Department of Law and Governance,
CUSB,
for the students
 MODULE-II:
THE BOARD OF DIRECTORS AND BOARD
COMMITTEES-VIII
BUSINESS JUDGMENT RULES(Contd.)
BJR has the following prerequisites:
(i).There must be a business judgment;
(ii). Business Judgment is made by a director or officer;
(iii). Who owes a duty of care and diligence.

Elements of BJR:
1. Good faith
 MODULE-II:
THE BOARD OF DIRECTORS AND BOARD
COMMITTEES-VII

2. Absence of self dealing;

3. Informed basis;

A director should be informed about:

1. The business reasons for the transactions;

1. The impact of the transaction on the shareholders, employees, customers

and other constituencies;
 MODULE-II:
THE BOARD OF DIRECTORS AND BOARD
COMMITTEES-VII

2. Management’s view as to the price and factors affecting the price;

3. The fairness of the transaction etc.

Case Laws:
1. Peoples Department stores Inc(Trustee of) vs. Wise (2004)3
S.C.R.461;
2. Itak International corp. vs. CPI Plastics Group Ltd., June 21,
2006(2006 can.LII 22117).
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THE BOARD OF DIRECTORS AND BOARD
COMMITTEES-VII
3. Aronson vs. Lewis 473 A. 2nd 805, 812(Del.1984);

4. Grobow vs. Perot, 539 A 2nd 180 (Del 1988).

5.Smith vs. Gorkom, 488A 2nd 858(Del.1985).

 MODULE-II:
THE BOARD OF DIRECTORS AND BOARD
COMMITTEES-VII

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