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Law-and-Economics of Business Judgment Rule in India

Author

Listed:
  • Singh Rahul

    (Department of Law, National Law School of India University, Nagarbhavi, Bangalore, 560242, India)

  • Amrit Pratyay

    (National Law School of India University, Bangalore, Karnataka, India)

Abstract

The article argues that the contours of the ‘business judgment rule’ (hereinafter, ‘the rule’ or ‘the doctrine’) have not been properly delineated and add avoidable transaction costs in terms of business decision-making. On the premise of ‘influence’ existing between Board Directors and countervailing requirements of legal compliance, it becomes imperative to study both components. In the absence of any clear legalese on the latter component incentivizes Directors in two ways – by inhibiting judgment or by incentivizing abuse for a perceived higher probability of economic gain.

Suggested Citation

  • Singh Rahul & Amrit Pratyay, 2024. "Law-and-Economics of Business Judgment Rule in India," Asian Journal of Law and Economics, De Gruyter, vol. 15(3), pages 331-342.
    • Handle: RePEc:bpj:ajlecn:v:15:y:2024:i:3:p:331-342:n:1001
    DOI: 10.1515/ajle-2023-0045
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