Directors Breach Of The Duty Of Civil Liability Study

The modern companies are becoming larger and larger. The expansion of the powers of directors makes the interests of the company and the stakeholders in danger for the possibility of the abuse thereof. It is a significant part to Strengthen the obligation of directors and establish a sound accountability mechanism of the breach thereof to perfect the corporate governance structure. It is an important part of company law in many countries to strengthen the company director's liability to balance the power and liability. The constraints on the conduct of directors in the company mainly relies on the establishment of the corporate governance structure. However, there is lack of the specific provisions of the constraints of powers and obligations of directors. The duty of care and the duty of loyalty are the most important obligations of directors. The duty of loyalty stresses on the requirements of morality of directors and ensures the directors faithful to the shareholders of the company, while the duty of care is the requirement of competent skills and stresses on the basic competence of directors in daily decision. As decision-makers in the specific business of a company, the directors shoulder the disposition of significant assets and other administrative tasks. The proper regulation of directors' behaviors is significant to make them dedicated to the company. The thesis develops the view that we classify the duty of care and specify the duties of directors to strengthen the integrity of them. The other hand, it is more crucial to make the duty of care of directors practiciable in the judicial process.The existed Company Law of P.R.C only provides the duty of care of directors (diligence obligations) briefly and ignores the specific standards, which is difficult to investigate the liability of directors. The Company Law's another breakthrough is the representative litigation that is significant for shareholders to supervise the directors, but there are still lots of shortcomings. In other words, there are many contradictions and obstacles when we investigate the liability of directors in the judicial practice. Besides the introduction and conclusion, the thesis includes five parts as follows:Chapter one defines the concept of duty of care, it's specific content, as well as the diffrences between the duty of care and the duty of loalty, introduces the specific requirement of the diligence, prodence, and the skills in the scope of duty of care, and clarify the relationship of duty of diligence and duty of care, the legislation and its deficiencies in our company law is involved in this part.Chapter two details the theoretical foundation of compensatory damages when the directors breach the duty of care. The countries of common law and civil law have different theory. In China, the legal status of directors and legal relationship between the directors and company are not expressly provided in General Principles of Civil Law and Company Law. By comparasion, the thesis details the agency theory and trust theory and puts forwards the opinion that the relationship between the companies and directors should be the relationship of principles and agents subject to contract law with a breakthrough point of the theory of nexus of contract.Chapter three focuses on the cause of action when the directors holds breach of duty of care and their rights of defense. the liability of directors for the breach of duty of care is because of wrong doings, a typical liability for wrongs, belonging to liability for tort. Different from the traditional view, the thesis puts forwards the view that the liability has the nature of tort and brech of contract. The thesis suggests we should adopt the business judgement rule for the directors as a cause of right of defence to protect the legal rights of directors.Chapter four details the standards to judge the duty of care of directors as well as the application of business judgement rule in the judicial practice. First of all, the thesis introduces some provisions and evolution of the standards of duty of care from a comparative perspective. Then, the thesis introduces the business judgement rule and the relationship between the rule and duty of care of directors, analyses the significant status of the business judgement rule and its condition of application form the perspective of judicial procedure, and develops the view that is necessary for us to adopt it.Chapter five is the perfection of the accountability mechanisms in the procedure after breach of duty of care of directors. in the suit filed by company, the thesis further clarifies the policy-making body and its representative agency. For the derivative action, the thesis puts forward some suggestions to make the shareholders active to file a suit and analysis the application of the business judgement rule in the the proceedings. Apart from the suit filed by the company and the shareholders' derivative action, the thesis holds the view that the creditors' rights of subrogation, shareholders' rights of dismiss and investigation in the procedure of bankruptcy make the directors liable much better.To sum up, the thesis refers to a large number of related materials home and abroad. With the spirit of quality before quantity, thesis makes use of the dialectical method, the historical method, value-analysis method and case study approach to deeply study the duty care of directors and the ability when the directors breach the duty from the perspective of the interests balanced among the directors, the company and the shareholders. In the light of specific conditions in China, the thesis puts forward some specific measures to perfect the duty of care of directors and the accountability mechanism thereof.