Sharija Che ShaariI and Junaidah Zeno and Ida Shafinaz Mohamed Kamil (2024) Guardians of the boardroom: the protective power of the business judgment rule in Malaysia.
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Abstract
The Business Judgment Rule (BJR) protects directors from liability when they make business decisions in good faith and with due care. Granting directors a legal shield is important to encourage bold strategic decision-making without fear of constant litigation. This paper examines the extent to which the BJR protects Malaysian directors from personal liability when making business decisions by analysing the Companies Act 2016 and relevant case law through a doctrinal methodology. It is found that the BJR is not a blanket immunity for the directors as they are accountable for decisions made with fraud, conflicts of interest, or gross negligence. Hence, the BJR strikes a balance between protecting directors from frivolous lawsuits and holding them accountable for negligent or fraudulent behaviour. This paper concludes that the BJR is important in encouraging bold strategic decision-making while ensuring director accountability. This paper contributes to the existing literature by analysing the specific application of the BJR in the context of the Malaysian Companies Act 2016.
| Item Type: | Proceedings |
|---|---|
| Keyword: | Fiduciary duties, Business Judgement Rule, Companies Act 2016, Doctrinal Methodology, Directors |
| Subjects: | H Social Sciences > HF Commerce > HF1-6182 Commerce > HF5001-6182 Business K Law > K Law in general. Comparative and uniform law. Jurisprudence > K1-7720 Law in general. Comparative and uniform law. Jurisprudence |
| Department: | FACULTY > Faculty of Business, Economics and Accounting |
| Depositing User: | SITI AZIZAH BINTI IDRIS - |
| Date Deposited: | 24 Mar 2025 12:40 |
| Last Modified: | 24 Mar 2025 12:40 |
| URI: | https://eprints.ums.edu.my/id/eprint/43294 |
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