The Directors Of Joint Stock Limited Company Liability For Damages Study

To achieve good corporate governance, we should establish a rational system of directors' liabilities for damages. This dissertation tries to study this issue systematically.This dissertation consists of five chapters.The first chapter studies the basic theories on directors' liabilities for damages. It makes comparatively systematic research on the basic issues concerning compensation for damages, gives the definition of directors and introduces their election and removal, the basic structure of their duties. Directors' duties mainly derive from their relationship with companies. This dissertation argues that the nature of relationship between directors and their companies hi China is a kind of quasi-entrustment, And on the basis of this, this dissertation proposes that directors own both duty of care and duty of loyalty to their companies. In addition to owning duties to their companies, directors own duties to the third parties.The second chapter focuses on directors' damages for breach of duty of care. To set the standard for directors' care is one of the most important things in studying directors' damages for breach of duty of care. As we know, our Companies Law doesn't give a clear standard for directors' care. This dissertation suggests that our future Companies Law should stipulate an objective standard for director's care, that is, director owns a duty to the company to exercise proper care in managing the company's affairs, such duty must be discharged with the care an ordinarily prudent director hi a like position would exercise under similar circumstances. Our future Companies Law should also permit companies to reduce or enhance such statutory standard for care by companies' constitution, memorandum or contract. In order to judge precisely whether a director has breached his or her duty of care, this dissertation proposes that directors' duty of care should be divided into duty of skill, duty of care and duty of diligence. With the provision of directors' objective standard for care, directors own heavy duty of care to their companies. In order to encourage talent persons to assume the position of director and to prevent directors from taking too conservative actions, this dissertation advocates introducing the business judgment rule.Chapter three studies directors' damages for breach of duty of loyalty. Directors' duty of loyalty contains abundant contents, and we should take a classification approach so as to understand it clearly. This dissertation categorizes the contents of duty of loyalty into six kinds, i.e. duty of not to misappropriate companies' property, duty of not to divulge companies' secret, duty of not to usurp corporate opportunity, duty of not to take bribes or other illegal benefits, duty of not to do self-dealing transaction, duty of not to compete with the companies. After researching the latter three kinds of duties in detail, this dissertation suggests that our Companies Law should introduce corporate opportunity doctrine and perfecting our stipulations concerning self-dealing and competition with companies.Chapter four concentrates on directors' liability for damages to the third parties. The traditional companies law insisted that directors own duties only to companies or shareholders as a whole, it didn't acknowledge directors' duties to individual shareholder, not less to creditors or other third parties. But the modern companies law admits directors duties to the third parties such as individual shareholder and creditor in some degree. In China, the Companies Law does not provide directors' duty to the third parties, and the only provision stipulated director' liability fordamages to the third parties is section 63 in the Securities Law. In order to protect the interests of the third parties, especially the interests of creditors, our future law should make directors own fiduciary duties to the third parties, and impose personal liability for damages on a director where he or she does not apply for bankruptcy of the company he or she served in time, or...