On The Study Of Directors' Duty Of Care

Directors'fiduciary duty of care and loyalty are two of the most important contents among various duties owned by corporation directors. Directors, however, are playing vital roles in the administrative and operative procedures of a corporation, enrolling in daily businesses such as making decisions, settling cardinal assets and etc. The duty of care is designed to set forth, governing the whole procedures when directors make their business decisions, requiring directors as agent or quasi-trustees of the corporation to carry out a reasonable care and prudence. This desertion will introduce legislative materials from Japan, Germany, United Kingdom, Canada and United States and as an analytical study, it will get a closer eye on how our Chinese Corporation Law shall establish a suitable system concerning the directors'duty of care.First Chapter of this desertion will focus on the question --"What is directors'Duty of Care". Through a comparative study on the theories from both the civil law and common law system regarding the relationship between fiduciary duty and duty of care, duty of care and duty of loyalty, the viewpoint that under the Chinese law system, an independent duty as of the directors'duty of care shall be established will get deep explained. Furthermore, by generalizing the legislation of countries from both law systems, the viewpoint that in Chinese Corporate Law, the concrete description of the duty of care shall also be made clear will be forwarded. Chapter Two of this desertion will answer the question --"How does the Duty of Care come from". It will mainly introduce three traditional theories, including: the Tort Theory, Agency Cost and the relationship between the directors and the corporation. In the latter part of this chapter, a detailed study on the actual status that Chinese directors will have to face as well as the legitimate seat for Chinese directors will be discussed.Chapter Three of this desertion will answer the question--"To what degree shall directors exercise their duty of care". Taking the absolute differences in each case into account, only a relatively proper description on the degree of care can be stipulated in legislation. This desertion will select the U.S corporate law as a reference system, through the study on the historical development in American code and cases, introducing different conduct standards on directors'duty of care, to suggest that Chinese corporate law shall also set up its own objective standard of conduct for directors.Last but not the least, Chapter Four of this desertion will answer the question--"How can directors be indemnified from Duty of Care". It will have a comparative study on the utilization of Business Judgment Rule in corporate law field in Japan and United States. The significance to apply the Business Judgment Rule in today's Chinese legal practice along with the adoption requirement of this rule will also be set up in this desertion.