Business Judgement Rule in the Modernized Civil Code

Business Judgement Rule in the Modernized Civil Code

• 15.10.2019

This Tuesday, AmCham Moldova held a new #CivilCodeTalks session focused on business judgment rule.

Business judgment rule is a jurisprudential concept developed by the American courts, regulated in the corporate laws of many European states, and recently established in the Civil Code of the Republic of Moldova, according to which the administrator is not responsible for every managerial decision that later turns out to be wrong, but only for decisions that he/she knew or should have known, taking into account a number of criteria, that might be wrong.

During the session, the topic was discussed by Octavian Cazac (Turcan Cazac Law Firm), Nicolae Esanu (Secretary of State, Ministry of Justice) and Oleg Efrim (ERA Law Firm).

The conclusions of the debates include:

- Judges should not readily hold administrators accountable for their decisions;

- Judges cannot appreciate the opportunity and reasonableness of business decisions;

- When the company has demonstrated the breach of the obligation by the administrator, he/she will be exempted from liability if he/she demonstrates that he/she has acted with competence and diligence.