kaal:claim:1558614-022

The German and U.S. business judgment rules diverge most sharply at the German rule's fifth element, the requirement of no hazard decision or excessive risk taking, which German law presumes but allows to be rebutted.

As pointed out below, it is in this last element where the business judgment rules in the United States and in Germany diverge the most. German law presumes no hazard and excessive risk, but this presumption can be rebutted.

Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010), IV.A. The Business Judgment Rule, p. 29
https://ssrn.com/abstract=1558614 · source PDF

Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614

• German rule is code based in the Aktiengesetz; the U.S. rule is case law of the state of incorporation

definitionalsupport: arguedrisk-and-incentives

• restated_by kaal:claim:kaal-2013-acomparativeperspectiveo-012 Under German law, directors' business decisions lose the protection of the business judgment rule where the bu...
• extended_by kaal:claim:kaal-2013-acomparativeperspectiveo-013 German commentators, whose expertise German courts rely on heavily, concluded after the financial crisis that ...

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