The Business Judgment Rule: Analysing Walt Disney Case in the Nigerian Context

Authors

  • Khairat Oluwakemi Akanbi Author
  • Hafsat Iyabo Sa’adu Author
  • Abdulrasaq Adelodun Daibu Author

DOI:

https://doi.org/10.64306/20kfd077

Keywords:

Business Judgement , Companies , Corporations , Directors and Fiduciary Duty

Abstract

Corporations are vital to the economic development of any nation; they are an important vehicle for the development of capitalism. Directors are pivotal to the management of companies as they are often the alter ego of companies. The sensitive nature of the position of directors confers on them the status of a fiduciary in respect of the company as they are entrusted with managing its resources and affairs and must act in its best interest at all times. Thus, the ultimate duty of a director is the fiduciary duty and from which other common law and statutory duties flow.  However, in certain instances, a director while acting as a fiduciary and in what he believes to be the best interest of the company may end up harming the company. The question therefore is, will the act of the director which has negatively affected the company be ameliorated because such act was done in the best interest of the company? Will intention be a strong factor in deciding directors’ culpability for a decision taken but which has affected the company adversely? This issue came to fore in the US case of Walt Disney Derivative Litigation which espoused the business judgment rule. The objective of this article is to analyse the business judgment rule and its exposition in the Walt Disney case. The article also aims at examining the Nigerian company law with the aim of determining the application of the business judgment rule. It finds that while there is no express reference to the business judgment rule in the Nigerian company legislation and case law, there are provisions in the law that are in tandem with the spirit of the business judgement rule. Thus, directors in Nigeria also enjoys the protection which affords them the opportunity to exercise their discretionary powers without fear of liability as long as the powers are exercised in good faith. The article further finds that directors in Nigeria in fact enjoys wider protection than that offered under the business judgment rule as they enjoy what can be referred to as anticipatory protection which enables them to apply to court to seek some relief in anticipation of an action by the company itself or a minority shareholder. This article adopts the doctrinal research methodology to analyse the Nigerian legal framework in the context of the business judgment rule. It concludes by recommending that the position in Nigeria on anticipatory protection be adopted in stretching the business judgment rule in the United States while also recommending an amendment in the Nigerian Companies and Allied Matters Act to clear ambiguity and further enhance director’s protection. 

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Published

04-03-2026

Issue

Vol. 2 No. 1 (2025): IUM Journal of Laws (IUMJOL)

Section

Articles

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How to Cite

Oluwakemi Akanbi, K. ., Iyabo Sa’adu, H. ., & Adelodun Daibu, A. (2026). The Business Judgment Rule: Analysing Walt Disney Case in the Nigerian Context. IUM Journal of Laws (IUMJOL), 2(1), 33-50. https://doi.org/10.64306/20kfd077