Business judgement rule in Czech Corporations Act

AuthorJaromír Koziak
PositionDepartment of Commercial Law, Masaryk University in Brno, Czech Republic
Business judgement rule in Czech Corporations Act
Assistant professor JUDr, PhD Jaromír KOŽIAK
Czech private law is curren tly under going a thorough transformation. This
inclundes adoption of a br and n ew Corporations Act, which is to super sede the curr ent
Commercial Code. The new legislation introduces severa l new rules governing liability of
company executive officers. One of these is business judgment rule. It should provide
company executive officers with a certa in level of protection against litigan tion if specific
terms are met, it is pre sumed, that they ca rried out their r esponsibilities with proper car e. I
intend to demonstra te, that the czech business judgment r ule is flawed, despite the fact tha t
it draws from foreign examples and tha t this regula tion, a lthough seemingly
groundbrea king, in fact changes no thing in examination of the decisions of the company
executive officers in Czech Republic.
The main goal of this a rticle is ther efore to analyze and criticize the business
judgment rule in the new Czech legisla tion and to compar e it to notable foreign legal
systems. The methods used ar e inductive and deductive reasoning, a uthors own analysis of
legal text, compar ative method and compilation of availa ble resources r elating to the topic
of the article.
Keywords: Business judgment, Company executive oficer, co rporate body,
company, corpora tion, Corporate la w.
JEL Classification: K22, K40
Bailes Manning once said: „Some people are fortunate since they have
never heard of the business judgment rule.“2 That has been true for most Czech
lawyers, as the concept of business judgment rule (further referred to as BJR) is a
new one in Czech law. However, the BJR is included in the new Corporations Act
that should enter into force on 1st January 2014 and plays only a small role in
thorough reform of Czech Civil and Commercial law that is currently in the final
phase of its introduction into our legal system. Therefore we stand before the
question of how to cope with the new legislation and whether it will improve our
legal system or not.
As this legislation is completely new, this paper will provide basic analysis
of the regulation and compare it with similar rules in foreign legal systems.
Therefore the main research methods used include authors own analysis of a legal
1 Jaromír Kožiak - Department of Commercial Law, Masaryk University in Brno, Czech Republic,
Business Judgment Rule in Overview, available at

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