Study On Directors' Liability For Corporate

According to the theories of the relationship between director and corporate and the rights of director, directors are required to have certain responsibilities—duty of loyalty , duty of care and duty after ceasing to be director which serve as the foundation of directors' liability. This paper mainly probes into their civil liability. A breach of directors' duties might be contract breach or tort or Concurrence of Contract-Breach and Tort. According to imputation principles, principle of fault and principle of no-fault are both applicable depending on the nature of breach. In order to investigate directors' responsibilities, most countries have set up their own executive procedure of legal liability, such as corporate's direct litigation, the shareholder's direct litigation, shareholder's derivative litigation .While we are focusing on the liability that the directors have for corporate and the third party, we should also realize the risk in this career. Any breach on the part of director will lead to huge loss to corporate, which will result in low motivation in director's willingness to risk and to make decision if he has to take the full responsibility himself. To maintain a healthy development of corporate and to reduce burden and pressure on the part of director, most countries also have their own legal systems on limiting or eliminating director's liability while determine their liability. There are many ways to limit and eliminate directors' liability, such as legal provisions, corporate regulations, shareholders conference, the board as well as judgment principles of management.However, the above measures are far from enough to balance the rights and obligations of directors. In order to maintain the balance between directors' rights and obligations and to protect their profits as well, the system of liability insurance for directors—a risk transferring mechanism came into being. It is necessary to perfect the system of liability insurance as well as the directors' liability for corporate.