The rule creates a presumption protecting board decisions from judicial second-guessing. Rebutting it requires showing a lack of independence, bad faith, gross negligence in the decision process, or self-dealing.
Rebuttal shifts the burden to entire fairness review.
Alternative Names:
Business Judgment Presumption, BJR
Why it Matters?
The rule protects the decision process rather than the outcome, so a decision that proved disastrous remains protected if the board informed itself and acted without conflict. That makes board minutes, materials distributed in advance, and the record of deliberation the evidence that determines the case. Rebutting the presumption shifts review to entire fairness, which defendants rarely survive, making the presumption itself the whole contest.
Frequently Confused with
Related terms
Frequently asked questions
Does the rule protect bad outcomes?
What happens if the presumption is rebutted?
