On the Criteria to Assess the Decisions of the Business Corporations’ Directors: From Detailed Regulations to Evaluative Notions

Abstract

An entrepreneur performing his/her activity upon terms of risk requires recognition of the fact that he/she has wide discretion in order to independently determine and choose alternatives for taken business decisions. Such decisions may impact the interests of numerous persons. Therefore, to minimize the risk of abuse and error the public authority is interested in establishing control over a decision making person and in limitation of the entrepreneur’s managerial freedom. In this article the author analyzes some legal models of such limitation used in Russia and abroad under different economic conditions. The author claims that under market economy conditions it is expedient for the purposes of public control to apply evaluative notions in private law. In the meantime to limit judicial outrage and to ensure compliance with the legal certainty requirement, the author proposes to limit judicial discretion as regards the judge assessing the evaluative notions in a specific case by application of a criterion of «apparent obviousness». This criterion is derived by analogy from the analysis of similar situations regulated by both public and private law, where there is a need, on the one hand, to provide a decision making person with wide discretion, on the other hand, to establish the relevant control by the public authorities.

Keywords:

liability of directors, business judgment rule, legal certainty, limits for business decision making