Judicial Review Of Directors' Duty

With the transformation from shareholder-meeting-centralism to directorate-centralism, directors represent companies outside, and manage companies'affairs inside. The right of directors expands significantly. The directors own the right to run business, while they should bear the relevant liability. In 2005, the corporate law of CPR stipulated the directors'duty, the duty of loyalty and the duty of care. The duty of loyalty require the directors do their job loyally,safeguard the interest of the corporation,do not let the personal interest conflict with the corporation's during the management. And the duty of care require the directors do their job faithfully, and the method of management must be served the interest of corporation under directors'rational care . When the directors and shareholders dispute and the directors disobey the fiduciary duty, the judicial organization may get in as a third party for proper adjudication by examining whether the directors fulfilled the duty. Through analyzing the characters of the judicial review of directors'duty, learning lessons from the mature legislature and judicial experiences of UK and US, combining the relevant studies on corporate law of CPR, this dissertation explores the standard for reviewing the duty of directors and makes a guiding role in handling the relevant cases in China.This dissertation consists of the following four chapters. Chapter 1 introduce the basic theory,legal status of directors'duty .And it reveals the nature and value of judicial review of the directors'duty, which are safeguarding the fairness and justice,maintaining the social order at a large and ruling out the obsta cles in law operation. In this sense, fairness and justice is the legal value for judicial review of directors'duty, while the effectiveness is another important economic value.Chapter 2 study on the judicial review of directors'duty of loyalty. At first, On the basis of analyzing the meaning and the difference between the duty of care and the duty of loyalty, we put forward judicial review standards, which are the interest and appropriateness of transaction. Second, different types of directors'duty are analyzed such as self dealing,usurping corporate opportunity and competing with the companies etc.Chapter 3 study on the judicial review of directors'duty of care so as to make sure the general standard of care duty. Compare with different judicial review standards of care duty around the world, this dissertation focus on the current situation and judicial review standard of care duty in China.Chapter 4 study on the business judgment rule which embody the judicial application of duty of care. At first, this dissertation analyzes the core meaning of the business judgment rule and the difference from the duty of loyalty. Secondly, it illustrate the judicial application of business judgment rule in detail, from strict,general to specific judicial applicable principles. Lastly, it put forward the need to introduce and how to design the business judgment rule in China.