Company Executives Diligence Obligations

The current Company Law only give a brief description to the diligence obligation of the company senior executives instead of a specific interpretation, which can not restrain the senior executives’behavior on a proper way that it should be.In view of the above situation, this article plans to give three sections. In Section One, it’s to analyze the concept of the diligence obligation of the company senior executives and to discuss the system value of this obligations as well as the research background on it, and then put forward the necessity for the study on this obligation. During Section Two, in the analysis of the development trajectory and the history of the provisions on the diligence obligation of the company senior executives in United States, Germany, Japan and other countries, at the same time in combination with the management experience of Shanxi and Huizhou Merchants and traders in the qing dynasty which is the history product consistent with the national conditions then/at that period under the country-specific historical circumstances, it obtains the reasons of the causes and experiences for various provisions and their advantages and disadvantages appeared in today’s global circumstances. Throughout the laws of United States, Germany, Japan and the other countries, it gets to know that there are generally three standards at present for the diligence obligation of the company senior executives on researching on those countries’diligence obligation standards:The first is loose general diligence standard. In the United States, the directors only need to finish the general diligence obligation for company’s affairs. As long as the directors do not have gross negligence, they don’t need to assume any liability for the loss of the company. According to the provisions of the company law from the U.S. states, the company reserves the right to waive the directors’responsibility in violation of the diligence obligation with the agreed form in the charter,. That means if directors constitute gross negligence but not are in violation of the duty of loyalty, they can also be exempt from partial or even total liability under the specific circumstances. Therefore, the American senior executives’diligence standards are relatively loose. The second is the strict diligence standards. According to Germany Stock Corporation Act, senior executives are supposed to be conscientious enough as an honest and responsible business leaders when they’re leading businesses. Board members in breach of its obligations should be responsible for compensation as a debtor for the resulting losses caused to the company. For whether a board member has circumspection on integrity and responsibility for which he are supposed to obtain,/For whether a board member is honest, responsible and circumspective. There is a dispute, then the directors bear the burden of proof. From the level of provisions of the German Companies Act, the cost of diligence obligation is higher than average, and it’s based on experts’measurement standard which adopt objective criteria. The third is compromised strict diligence standard. Taking the Japanese diligence standard as representative, it’s between the general diligence and the strict diligence. The director takes responsibility for diligence obligations as a kind manager of the company. The obligations derived from the kind-hearted-father obligations from Roman law, and it’s a rigorous diligence requirements. On the other side, Japanese Company Law also provides that the Company shall be entitled to eliminates the liability of directors who violate diligence obligation but have no gross negligence from goodwill within the statutory amount in the form of articles of incorporation, thus it also has the features of the general diligence obligation standard.The third part, through analyzing the legislative status quo of the diligence obligation of the company senior executives and the basic national conditions of China at present stage, combining with foreign desirable legislative experience, puts forward the legislative proposals which adapts to China’s national conditions. That is to combine with some representative national and regional legislation instance as well as the management instance which was made by ancient Chinese Business Group-Shanxi Merchants and Huizhou Merchants for supervising their own senior management and analyze and summarize them, seeks to explore one legislation mode on the diligence obligation of the company senior executives, and this mode should be suitable for our National Conditions and easy for implementation. in order to standardize corporate executive behavior to a certain extent.