The Hokkaido Takushoku Bank was one of the most lenders to real estate during the 1990's in Hokkaido. Its financing activities covered across the Hokkaido, including the parts of Japan. It was collapsed under the weight of bad-loan losses in 1997. As a result of the extensive failures that have occurred since 1997, legal action against previous bank directors, who made decision to bad loans, was issued.
The question is, what should be the business judgement rule for a bank director, and in particular, what should be the court standard for determining if the duty of care has been breached by the director. This article examines the Japanese case so called 'bad loan to sophia group in Hokkaido' that brought to supreme court related to bank directors' responsibilities and discusses the business judgement rule in Japan. The differences and similarities in legal systems and the court rulings in Korea and Japan also are compared.