business judgment rule legal definition

The legal doctrine that a corporationÂ’s officers and directors cannot be liable for damages to stockholders for a business decision that proves unprofitable or harmful to the corporation so long as the decision was within the officersÂ’ or directorsÂ’ discretionary power and was made on an informed basis, in good faith without any direct conflict of interest, and in the honest and reasonable belief that it was in the corporationÂ’s best interest.