The Study On Prohibiting Usurpation Of Corporate Opportunity Rules

The corporate opportunity doctrine is an important content of the directors’duty of loyalty. Originated from the countries of Anglo-American law system, gradually formed and developed from a large number of judicial cases’ inspection of more than100years, the theory had become mature and widely used in the world. Many continental law countries such as Germany, Japan, and Korea has also draw prohibits usurpation of corporate opportunity system into their countries. China introduced this rule as the149th in the "Company Law" in2005when the act was revised. According to the149th, without the agreement of the board of shareholders or the general meeting of shareholders, the directors and senior managers are not allowed to seek corporate business opportunities for himself or others by taking advantage of the convenience of his position; the receipts earned from violating provisions in the preceding section should be owed to the company. Although the rules are implemented in our country for more than seven years, there are a series of problems whatever in theory or practice. Such as whether the subject of duty of prohibiting usurpation of corporate opportunity is limited to the directors and management personnel; how to identify the directors and relevant management personnel’s behavior belongs to prohibit usurping corporate opportunity rules regulations; whether the corporate opportunity cannot be used by directors of the company and its senior managements in any condition. These problems not only bring certain difficulties to the judicial practice in China, but also provide a relatively vague guideline to the people’s behavior.Through comparative analysis, this paper combined the "corporate opportunity" precedent and theory research of Britain and the United States, aimed at the specific national conditions of China, to investigate the path which our country referring to. Thus, the judge will have a clear judgment basis in specific cases on the one hand; on the other hand, it will provide clear guidelines to the directors and senior management personals to standardize their behaviors. This paper consists of the introduction, text and conclusion, and the text is divided into three parts listed as follows:Firstly, the paper mainly introduces the basic theory of the Company opportunities and analysis the origin of corporate opportunity rules started from the perspective of the conflict of interests. Then comparing with the self-dealing and prohibition rules, the article summarizes the specific connotation of corporate opportunity rule. Again, the article analysis the necessity of introducing corporate opportunity rules in theory and practice. Secondly, focuses on the problems of the company opportunity rules in our existing law. The mainly problem involves:the lack of corporate opportunity identification standards; the object of the corporate opportunities obligations is not definite, the exceptions of the prohibition of usurping corporate opportunities and the corresponding remedy measures on usurpation of corporate opportunities are not complete. Thirdly, the paper put forward a viable pattern to the development of corporate opportunity in China through the method of comparison, including the legal identification Criterion of corporate opportunity, the obligation subject, the exceptions and related relief measures in Britain and America, both in theory and judicial circles. Construction of China’s corporate opportunity identification standards should consider the following factors:source of the company opportunity; the opportunity must be associated with the activities of the company business opportunities; whether the board of directors and senior management personnel have the duty to disclose to the company for a certain business opportunities; in the specific standards of choice should be treated differently. The directors, controlling shareholders, the board of supervisors in the prohibition of usurping corporate opportunity should be within the scope of obligations of the subject. Considering our country’s ban on usurping corporate opportunity exceptions include the following factors:it’s necessary to regulate the range and the procedures of the directors’ taking opportunities that belong to the company under legitimate conditions. The usurpation of corporate opportunity relief measures shall define the body and the period of the Recovery Right, and handle the competition between the Recovery Right and the damage compensation claims.