The Business Judgment Defence: Insights from ASIC v Rich
(2010) 28(3) Company and Securities Law Journal 164
Full text article
In compliance with copyright legislation, all requests for articles must be submitted using our Document Delivery request form. A template of the form is available at Document Delivery.
In Australian Securities and Investments Commission v Rich  NSWSC 1229 Austin J provided the first comprehensive judicial analysis of the statutory business judgment defence in s 180(2) of the Corporations Act 2001 (Cth) . The judgment addressed important, mostly unanswered, questions for directors and officers around the use of the business judgment defence: What is a business judgment? Who bears the onus of proof? What is the relationship between the defence and the primary duty of care and diligence in s 180(1) ? What is the role of the common law business judgment rule? What does the business judgment defence require? What is the effect of the requirement for a "rational belief"? This article analyses the judgment and extracts some general guidance about how the defence can be usefully applied by managers taking defensible commercial risks.