Directors Self-dealing Regulation

The director as the representative of super managers in company according to his relationship with the company shoulders the duty of care and the duty of loyalty to the company .The duty of loyalty requests that the board director spares no pains to do his work for the company loyally and justly, cannot make his personal interests conflicted with company's .In director self-dealing, the director couldn't place his personal interests over the company's, should make the choice that can initiate the company interests. Whether in the English-American law system or in the Continental law system, all countries have established related legal systems to standardize the director self-dealing in order to prevent the board director from abusing their positions and powers to violate the company interests.The article includes four parts totally:The first part: Director self-dealing's definition. A common deal is the course that two or more equal and independent subjects bargain and negotiate for the sake of themselves .In economic activities, there are no the real self-dealing usually. Therefore, the director self-dealing has its specific and particular meaning in law systems. The first part of this article introduces the regulations of self-dealing in the corporation law in England, the commercial corporation law in France and four kinds of basic self-dealing that the United States scholar Robert. C. Clark stated in his book. Meanwhile, this part analyzes connections of the director self-dealing with the director's duty. Finally, this part gives an appropriate definition of self-dealing, analyzes its elements, characteristics and classifications.The second part: the basic theories of director self-dealing. Firstly, this part clarifies the three logical premises of the economics, the separation of the ownership with the management leading to the agency cost inevitably, the director self-dealing including economic characteristic and latent risk. The reasons of allowing self-dealing to exist are that standardizing director self-dealing appropriately can lower the bargain cost, benefit the company practically. Secondly, this part clarifies the legal theory that the director's power is divided and constrained in impartial director self-dealing. The regulations about self-dealing reflect the values that deal security and fairness are first and consideration is given to efficiency and benefit at the same time. Corporation self-government and regulations in law...