It is trite that an ideal board of directors will always be careful, loyal and act in good faith. However, it must be recognized that directors as ordinary human beings are not infallible. As the complexity and sophistication of business activities increase with operations extending beyond borders and across industries, so too does the demand on management – especially on boards of directors of companies – to ensure that appropriate standards of corporate governance are implemented and enforced.
With increasingly onerous demands imposed upon directors – who are often viewed as the primary gatekeeper – there is a need to ‘balance the scales’ so that the office remains sufficiently desirable to attract and retain the next generation of corporate leaders.
This seminar advocates for the enactment of a statutory business judgment rule in Hong Kong to address this issue. Crucially, the rule must be recognized for what it is, namely, a statutory compromise between two competing policy objectives. On the one hand it seeks to recognise the director’s authority to make decisions without being second-guessed, while on the other it seeks to ensure that the director remains accountable.
Professor CK Low
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