{"id":5055,"date":"2020-08-17T10:00:47","date_gmt":"2020-08-17T08:00:47","guid":{"rendered":"https:\/\/blog.startups.ch\/en\/?p=5055"},"modified":"2020-07-19T20:54:51","modified_gmt":"2020-07-19T18:54:51","slug":"business-judgement-rule","status":"publish","type":"post","link":"https:\/\/blog.startups.ch\/en\/business-judgement-rule\/","title":{"rendered":"Business Judgement Rule"},"content":{"rendered":"\n

In retrospect, it is always easy to say that an accident was foreseeable, and hardly any other situation has shown this as clearly as the financial crisis. The Business Judgement Rule is intended to prevent managers from being punished by courts for negative business results despite cautious action.<\/h2>\n\n\n\n
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Fear of decisions<\/strong><\/p>\n\n\n\n

The business judgement rule sets out rules for courts or judges on how they are to review the actions of the management and the board of directors. The latter often have to make difficult business decisions, which under certain circumstances may bring high profits but usually also entail significant risks. The launch of a new product line, for example, can put a lot of money in the till or drive a company to the brink of bankruptcy if the products do not achieve the desired success. Because boards of directors and managing directors are responsible for the damage (Art. 754 CO<\/a>) they cause to a company, they must exercise caution when making business decisions. This rule is also quite sensible, as it prevents managers from taking too great a risk. However, an excessively strict liability regime carries the risk that managers may be reluctant to take worthwhile risks. Especially because it is always easy for outsiders to say with hindsight that a crisis was foreseeable. The business judgement rule is designed to prevent exactly this.<\/p>\n\n\n\n

Judicial restraint<\/strong><\/p>\n\n\n\n

According to the business judgement rule,\njudges must exercise restraint in the subsequent review of management\ndecisions. If certain criteria are met, managers are not liable even if their\ndecisions have negative consequences for the company. The responsibility does\nnot apply if the managers have made an independent and informed decision based\non objective review criteria. This means that when making a (risky) business\ndecision, the managers must not find themselves in a conflict of interest. This\nis the case when the self-interests of the managers and those of the company\nthey manage do not conflict. Furthermore, the decision must be made on the\nbasis of qualitatively and quantitatively sufficient information. The managers\nmay therefore also need to seek expert opinions. In addition, a careful\nbalancing of risks between the costs and benefits of a business decision must\nbe carried out. <\/p>\n\n\n\n

Documentation is crucial<\/strong><\/p>\n\n\n\n

In order to assess whether the criteria of\nthe business judgement rule are fulfilled, the existence of a formal\ndecision-making process is often taken into account in practice. In other\nwords, it is checked whether the managing directors have implemented and\napplied a careful review system that is used when making risky trade-offs. Such\na system not only simplifies decision-making, but also serves as documentation\nand thus contributes to the exclusion of liability. Consequently, conscientious\ndocumentation makes it easier for managers to prove to a court that they have\nacted with due diligence and have not violated their duties. <\/p>\n\n\n\n

Do you have any innovative business idea you would like to make come true? Use STARTUPS.CH experts to become self-employed.<\/p>\n\n\n\n\u00bb Blog<\/a>\u00bb Found online<\/a>\n","protected":false},"excerpt":{"rendered":"

In retrospect, it is always easy to say that an accident was foreseeable, and hardly any other situation has shown this as clearly as the financial crisis. The Business Judgement Rule is intended to prevent managers from being punished by courts for negative business results despite cautious action. Fear of decisions The business judgement rule […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[5],"tags":[],"jetpack_publicize_connections":[],"aioseo_notices":[],"views":952,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p54Pb1-1jx","jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts\/5055"}],"collection":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/comments?post=5055"}],"version-history":[{"count":1,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts\/5055\/revisions"}],"predecessor-version":[{"id":5057,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/posts\/5055\/revisions\/5057"}],"wp:attachment":[{"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/media?parent=5055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/categories?post=5055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.startups.ch\/en\/wp-json\/wp\/v2\/tags?post=5055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}