The business judgment rule under Argentine law

Abstract

Directors & Officers (D&O) must observe strict duties of behavior, whose breaking may lead to liability´s imputations. The business judgment rule is a moderation of the liability regime, and states that judges do not review certain business decisions made by D&O. The requirements to apply this rule are: a) the decisions were within the sphere of competence of the D&O, were not a legally imposed and were not a willfully behavior; b) the determination involves not assume extraordinary risks; and c) D&O got adequate and sufficient information before taking the determination. Under Argentine law there is no rule that refers to the business judgment rule, there are no relevant legal precedents regarding the issue, and few authors addressed this problem. The application of the business judgment rule presupposes that D&O did not act willfully or with gross negligence. But in Argentina are discussed the liability of D&O for mild or slight fault. Same authors think D&O do not have liability in this cases but only when they act with malice or gross negligence, and in this case the business judgment rule is inapplicable. We argue that there is liability in all cases of fault, regardless of their degree. So becomes important business judgment rule, which allows D&O avoid liability´s attributions when they had not acted with malice or gross negligence.