Understanding New York’s Business Judgment Rule

Officers and directors of start-up corporations are responsible for managing and directing the business’s affairs. As the business grows, so does the level of responsibility for officers and directors.  Under the “business judgment rule,” officers and directors of a corporation are immune from liability to the corporation for losses resulting from corporate decision making, within their authority, that were made in good faith and decided with reasonable skill and prudence. This is significant because the recovery of any successful claim against the company will be limited to the company’s assets only. Exceptions do exist. In my experience, matters where I would argue that the “business judgment rule” come up in the context of small businesses where there is a dispute between stakeholders and in homeowner’s associations and condominium/co-op boards where members dispute a decision. These kinds of cases turn on the facts of a case. So it is important that

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