"Business judgment cases differ in Ontario, Delaware", Lawyers Weekly

August 22, 2003

By John Sullivan

Reproduced from the August 22, 2003, issue of The Lawyers Weekly with the permission of LexisNexis Canada Inc., 75 Clegg Road, Markham, Ont

With all the focus on corporate governance these days, the business judgement rule is a hot topic.

Under the business judgement rule, courts defer to the specialized expertise of corporate directors, in a manner somewhat similar to the deference given to some administrative tribunals. The Ontario court of Appeal described it thus in Maple Leaf Foods Inc. v. Schneider Corporation (1998), 42 O.R. (3d) 177: " Provided that directors have acted honestly and reasonably, the court ought not to substitute its own business judgement for that board of directors."

Delaware is arguably the most important jurisdiction for corporate law in the U.S. The Delaware state courts have recently handed down two important decisions on businesss judegement rule: Omnicare, Inc v N.C.S. Healthcare, Inc., [2003] DE-QL 288 in April which delt with the the rule in the corporate take-over context...

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