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The Business Judgement Rule was introduced as a defence to breaches of Section 180(1) of the Corporations Act. Section 180(1) requires that directors and officers of corporations exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if the person was a director or officer who occupied the same position and had the same responsibilities as the director. BUSINESS JUDGEMENT RULE – SHAKY FOUNDATIONS?

Subsection (2) provides that a director or office is taken to have met the requirements of care and diligence if they: Made a business judgement in good faith and for a proper purpose; Did not have a material personal interest in the subject matter of the judgement; Informed themselves about the subject matter of the judgement to the extent that they reasonably believed to be appropriate; and Rationally believed that the judgement was in the best interests of the corporation. BUSINESS JUDGEMENT RULE – SHAKY FOUNDATIONS?

Stated objective to “encourage and afford broad protection to informed business judgements in order to stimulate risk taking and innovation and to give directors the confidence to make commercial decisions on their true merit.” Senator Hill, second reading of the Introductory Bill). BUSINESS JUDGEMENT RULE – SHAKY FOUNDATIONS?