company law Flashcards
section 54
Duty of care and business judgment rule
(1) Every manager of a private business corporation and every director or
officer of a company has a duty to perform as such in good faith
in the best interests
of the registered business entity
and with the care
business person would exercise in the same circumstances.
(2) In performing that duty
the manager
referred to in subsection (1) may rely on information
opinions
(including financial statements) of independent auditors or legal practitioners or of
experts or employees of the registered business entity whom the person reasonably
believes are reliable and competent to issue such information
opinions
statements.
(3) Subsection (2) applies only if the person makes proper inquiry where the
need for inquiry is indicated by the circumstances
and has no knowledge that such
reliance is unwarranted.
(4) A person who makes a business judgment acting as stated in subsection
-1
(2) and (3) fulfils the duty under this section with respect to that judgment if that
person—
(a) does not have a personal interest as defined in section 56 (“Transactions
involving conflict of interest”) in the subject of the judgment; and
(b) is fully informed on the subject to the extent appropriate under the
circumstances; and
(c) honestly believes when the judgment is made that it isin the best interests
of the company or corporation.
(5) No provision
whether contained in a company’s articles or a private business
