Limiting the liability of company directors helps create a culture of innovation
Family Business Newsletter - February 2018
Business decision-making always involves risks. So protecting the liability of directors in relation to the consequences that may arise from their decisions helps create a culture of innovation and paves the way for healthy risk levels to be taken on board and managed at companies. The business judgement rule is a principle designed to give directors a certain amount of immunity, allowing them to take on a reasonable degree of risk implicit in every business decision.
This, though, is protection for bold, not reckless, directors, and only if they act with care and diligence.
The business judgment rule as crafted in English speaking countries has been implemented in Spanish law through article 226 of the Spanish Companies Law, which lays down a number of requirements placed on directors: acting in good faith, absence of personal interest, sufficient information and an adequate decision-making process.
CONTENT IN SPANISH
Contacts
