Obligations And Responsibilities Of The Directors Of The Company Is A Comparative Study

Failure of directors to perform their roles causing loss and damage to the company, the shareholders, the creditors and the public occurs frequently. What are the causes of the failure? Is it due to the failure of the legal system? Is it related to the downfall of the moral, social or business culture? This dissertation tries to find out whether the legal system provides sufficient protection to the company, the shareholders, the creditors and the society. It is also focused to see whether the duties and liabilities imposed on the directors are appropriate and what measures could be taken to tackle the failure. By adopting a comparative approach, this dissertation will analyze the rationale of law draftsman, legislative intent, cases and statutes of different countries. In order to review the approach adopted by legal practitioners, the current issues and legal trend, Consultation Papers and Recommendations on the Law Reform of Hong Kong and England are also referred in this dissertation. On the basis of the cultural, social and economic condition of PRC, this dissertation presents some proposals or suggested amendments to the Company Law of the People's Republic of China. With about 200,000 words, this dissertation consists of a preface, 3 Chapters and a conclusion. In Chapter 1, the various concepts of director, board of directors, de facto director, dummy director, nominee director, shadow are introduced. Different theories on relationship between company and director are also discussed. An in-depth study on the concept of fiduciary duty and duty of care is made. While referring to some current issues in England Law Reform, this dissertation also addresses the relevant provisions of PRC Company Law and suggested amendments to the PRC Company Law.In Chapter 2, the duties and liabilities imposed on directors for the protection of the interests of shareholders are discussed. It also presents the relationship between the shareholder's right and the director's duties on the following matters: shareholder's meeting, right to inspect documents and access to information, issue of shares, interests and dividend, merger, and purchase of company shares. A review on the duties and liabilities of directors stipulated in PRC Company Law and recommendation for improving the system are made. In Chapter 3, the issues of whether director owes any fiduciary duty to potential investors, customers, creditors, employees and the society are addressed. The duties and liabilities imposed by the company law on the directors for the protection of third parties are discussed in detail. Suggested amendments to the Company Law of PRC are also made. Other protection mechanism and systems available for the creditors and the drawback of the present systems are analyzed.In the conclusion, it is considered that imposing duties and liabilities will only be one of the means to motivate director to perform his role and function properly. The following mechanism and systems to achieve effective corporate governance are recommended: establishing a Shareholder Rescue Fund to finance litigation against director, establishing a Professional Association of Directors, setting up Professional Director's Qualification Examination, imposing requirements on election of directors and improving the legal systems of Shareholders and Supervisory Board.