- Title
- Another way forward? The scope for an appellate court to reinterpret the statutory business judgment rule
- Creator
- Bainbridge, Wesley; Connor, Tim
- Relation
- Company & Securities Law Journal Vol. 34, Issue 6, p. 415-437
- Publisher
- Lawbook Company
- Resource Type
- journal article
- Date
- 2016
- Description
- The statutory business judgment rule in s 180(2) of the Corporations Act 2001 (Cth) is controversial. Some critics argue that it does nothing to enhance directors’ authority; others that it does too much. Whereas previous commentary has encouraged parliament to amend or replace the rule, this article considers the scope for an appellate court to reinterpret it. The article takes issue with three aspects of Austin J’s seminal interpretation of the rule in Australian Securities and Investments Commission v Rich (2009) 236 FLR 1; [2009] NSWSC 1229. First, it argues that s 180(2) was introduced to clarify and confirm the courts’ existing approach to reviewing managerial decisions, not to lower the standard of care expected of directors. Second, it argues that the provision should operate as a rebuttable presumption with the plaintiff bearing the onus of proof, not as a defence. Third, it disputes his Honour’s argument that there can be no “degrees of reasonableness” and interprets s 180(2)(d) in light of corporate law cases that assume that possibility. It also proposes an additional nuance to Austin J’s interpretation of s 180(2)(c). Finally it argues its proposed alternative interpretation has the potential to address the most significant policy concerns regarding the rule’s current operation.
- Subject
- statutory business judgment rule; directors; corporate law
- Identifier
- http://hdl.handle.net/1959.13/1325549
- Identifier
- uon:25299
- Identifier
- ISSN:0729-2775
- Language
- eng
- Full Text
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