@article{ART001823015},
author={문화경},
title={The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases},
journal={DONG-A LAW REVIEW},
issn={1225-3405},
year={2013},
number={61},
pages={279-312}
TY - JOUR
AU - 문화경
TI - The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases
JO - DONG-A LAW REVIEW
PY - 2013
VL - null
IS - 61
PB - The Institute for Legal Studies Dong-A University
SP - 279
EP - 312
SN - 1225-3405
AB - The business judgment rule (BJR) is a legal doctrine that protects directors, officers, managers, and other agents of a corporation from civil liability to the corporation for loss incurred in their business decisions within their powers and authority when there is sufficient evidence to show that the decisions were reasonably well informed, made in good faith, and without conflicts of interests, fraud, or illegality. This rule is a judicially created doctrine and has been developed through the U.S. case laws.
Although it has been 10 years since some scholars insisted the necessity of adoption of the BJR in the Korean Commercial Code, even the most recent Korean Commercial Code does not yet accept those opinions. Apart from this situation, the Daegu District Court decision, 99GAHAP13533, ruled on May 30th, 2000, began to apply the BJR to the corporate case. And after that decision, many Korean courts including the Korean Supreme Court actively have applied that rule with the similar requirements of the U.S. BJR. This situation raises a question that now Korea finally adopts the BJR even when there's still no such rule in the Korean Commercial Code. In addition, views are increasingly emerging that the Korean Commercial Code needs to be revised to have the BJR in it.
In these circumstances, this research studies leading cases of Korean courts on corporate cases in which the BJR was applied and discusses the necessity or possibility of the adoption of the BJR in the Korean Commercial Code. When analysing those cases, it is found that the Korean courts has set preconditions for the BJR application. These are (i) the business decision must be made on a reasonably sufficient amount of information with a duty of reasonable diligence; (ii) the decision must be made with the good-faith belief that the action taken was in the best interest of the corporation; (iii) the decision must be at least rational, or capable of some sort of coherent explanation with the care of an ordinary prudent person in a like position; (iv) the decision must not be made fraudulently or illegally.
Therefore, the BJR applied in Korean court cases looks similar to that in the U.S. court cases. Considering the equilibrium between statute law and case law and the recent global trends in corporate law, Korea needs to think about an explicit provision for the BJR included in the Korean Commercial Code. This provision for the BJR is expected to firmly establish the legal basis of Korean BJR application in corporate governance cases.
KW - Business Judgment Rule;The Korean Commercial Code;Directors' and Officers' Liabilities;Fiduciary Duty;Duty of Care;Duty of Loyalty;The ALI Principles of Corporate Governance;The Model Business Corporation Act (MBCA)
DO -
UR -
ER -
문화경. (2013). The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases. DONG-A LAW REVIEW, 61, 279-312.
문화경. 2013, "The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases", DONG-A LAW REVIEW, no.61, pp.279-312.
문화경 "The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases" DONG-A LAW REVIEW 61 pp.279-312 (2013) : 279.
문화경. The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases. 2013; 61 : 279-312.
문화경. "The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases" DONG-A LAW REVIEW no.61(2013) : 279-312.
문화경. The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases. DONG-A LAW REVIEW, 61, 279-312.
문화경. The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases. DONG-A LAW REVIEW. 2013; 61 279-312.
문화경. The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases. 2013; 61 : 279-312.
문화경. "The Necessity of Adoption of the Business Judgment Rule (BJR) in the Korean Commercial Code Reflecting the Recent Trends of the BJR in Korean Court Cases" DONG-A LAW REVIEW no.61(2013) : 279-312.
