Research On The Director's Duty Of Care

The new "The People's Republic of China Company Law "is amended and adopted by Tenth Standing Committee of the 18th National People's Congress in 2005. Company law is an important law in Chinese socialist market economy system. It also plays an important role for the establishment of a modern enterprise system, standardizing organization and conduct of corporations, protecting the rights and interests of corporations, shareholders and creditors, maintaining social and economic order, promoting the development of socialist market economy. There are major repairs, minor repairs and the forecasts and recommendations of them at the beginning of the Companies Act. From the point of the final adoption of the new company law, it concludes wide-ranging revision, changes to a large extent, more articles related. According to rough statistics, there are totally 224 provisions added, deleted, and changed. Among them, there are 41 clauses added, 46 clauses deleted, 137 clauses modified. The original clauses without any changes are only less than 10% of the total. At the same time, this change is not an overhaul of the surface and simple changes of letters and words, but a wide range of substantive the breakthroughs and innovations of rules of the system, re-design of many important systems and rules.It is important to amend and change the Company and have a direct and practical impact on the legislative of the Chinese Company Law, judicial and law enforcement, corporate practice, the theory of company law and the development of market economy and Chinese modernization. In theory, this modification on system of company law and rules has a number of changes, major breakthroughs and innovation. This will definitely promote and advance the principle of our law theory for further breakthroughs and innovation. After enactment of the new Company Law, the major and important task of Company Law Schools is comprehensive summary and evaluate the results of the present Companies Act, and to draw upon the development of company legislation and the latest achievements in theory of other countries for the purpose to discuss and analyze some of the major issues deeply, to do new interpretation and explanation for certain legal principles and doctrines, to improve and develop Chinese company law theory with enrich characteristics of the times meeting the practical needs of this theory. Based on the new content and structure of company law, the author does the comprehensive analysis on the director's duty of care to conduct, including"the concept of the director's duty of care","the content and the standards of the directors'duty of care","the civil duty of directors'care responsibility"and so on. The same time, under company law theory and practice in recent years, the author also makes recommendations on the Legislation of the directors'duty of care.Good law is not only a rule, but also a revolution. It is the support points of country's progress, and also the paving stones for the development of the society. But not any system design can get done once and for all. The same thing which can't be ignored is the reality that the obligations of States related to the directors attention than legislative enforcement has a clear hysteresis. First, the time lags in completion of relevant legislation, mostly after a few years or even decades can there be a court verdicts; secondly the deal of most cases about executive law plays an important role; thirdly, more informal means are used as well as in the United States with a higher degree in the legal system.In China, it has been a consensus for the directors'duty of care provisions without a full provision. There are no details in the relevant provisions in company law, and the cases investigated by relatively law enforcement are few. This phenomenon is related with the unsound system, the various interpretations of the provisions, and limited means to investigate directly. According to relevant rules in China and its operation, this article from the perspective of comparison and reference analyzed the relevant rules and operating conditions of other countries and the regional director's duty of care, summarized some rules on the legislation, and combined with our actual situation make some recommendations of the legislative duty.The article is divided into four chapters and the main content of each chapter is summarized as following. The first chapter focuses on the relevant theory about directors'duty of care. It is divided into three sections and described from the following three angle of view: the definition, related theory, function and value. The author defines the concept of directors'duty, which is referred to as"a good administrator's duty of care"and demanded when the operator making decisions, the standards of activities with an appropriate manner should be started at the point of the company's interest at heart. And they also should make reasonable care duties. The relevant provisions of the directors'duty of care are placed on the company law framework in this paper. The directors, supervisors and senior managements'obligations for the company are provided in the 148 and 149clause of Chinese new"Company Law", and the provision of the duty of the operators who have investigated liability provisions are fixed in twelfth Chapter of the Act. As a rule of law, the directors'duty of care should have at least three basic functional values: compensation, deterrence function, education and guidance functions.The second chapter mainly described the directors'duty of care and the problems of the judgment standards. Directors have the obligation to comply with the Companies Act and other provisions about the directors'duty of care in statutory law, to comply with the duty of care under the Articles of Association, and the duty of care in their own conduct within the purview. Criteria of determining the duty of directors is divided into subjective criteria, objective criteria and subjective and objective combination of double standards.The third chapter elaborated the civil liability for directors of breach for the duty of care and confirmed that the when directors breaches the duty of care and should be hold the perpetrators responsible, it is needed to investigate, take the evidence and make a decision. This process should strictly abide the rules of relevant law and procedural requirements. The author analyze civil liability for breach of duty of care from the obligation constitutes, breach of duty of care of the exemption mechanism, accountability means of breach of duty of care and accountability for breach of duty of care mechanism.The fourth chapter analyzed the improvement on legislation of the company's directors'duty of care. The current outstanding problems are as followings. There are some problems of the core concepts of the meaning, which have difficulties for the application definition; some intents which include mechanical requirements, and can't be achieved by the simple design of the system implementation. For some important impacts during the process of the cases'investigation, it is still a lack of relevant regulations, which undoubtedly add to the difficulties for the investigation of the breach of the directors'duty of care. At the same time, the preparation of related theory is lack. Address these deficiencies, this paper presents recommendations for improvement, and explains the reasons for the proposed improvements.