Application of the “business judgment rule” in domestic judicial practice

The article examines the emergence and gradual development of the approach to the application of the business judgment rule in the judicial practice of Ukraine. Particular attention is paid to the analysis of the first mentions of this rule in the decisions of the courts of first and appellate instances, as well as its further development in the practice of the Supreme Court. The transformation of the perception of the business judgment rule is analyzed – from declarative non-interference in the economic activities of companies to the gradual formation of a toolkit for assessing the actions and decisions of officials from the point of view of their compliance with corporate interests, good faith, reasonableness and the limits of entrepreneurial risk. All the Supreme Court resolutions that reveal the essence and apply the business judgment rule are analyzed: resolutions in cases No. 911/266/22, No. 910/15260/18, No. 910/11202/22, and No. 910/3782/21. In these decisions, the Supreme Court outlined a three-pronged approach to assessing the actions of officials: the official must collect and analyze all the information necessary for making a decision, there must be no conflict of interest, the business decision must not appear «strange» or absurd from the point of view of another reasonable person acting in the relevant circumstances and with the relevant amount of information (i.e., the decision must be rational and make sense). This approach is close to the classic American doctrine of the business judgment rule, according to which the court upholds a business decision if it is made in good faith, with the caution that a reasonably prudent person would exercise, and with a reasonable belief that the director is acting in the best interests of the corporation. An analysis of case law shows that the Supreme Court, while maintaining the possibility of judicial review, forms a standard of restrained interference in business activities, which helps to ensure a balance between the freedom of discretion of managers and the interests of other persons. The article also draws attention to the gradual spread of this approach at the level of first instance courts, which indicates the beginning of the formation of a stable national doctrine of the application of the business judgment rule.