Research On The Shadow Director System

Shadow director, the concept on the Laws of England, though not officially defined as the company director, is able to command the company behavior depending on its "status" in the company. Shadow director resembles the director of facts, the controlling shareholders and actual controllers, but there are some differences:the director of facts doesn’t exist in the back, who takes office in his directors’ position, but the shadow director must be hidden in the dark; the meaning scope of controlling shareholders and actual controllers including the shadow director, is not limited to shadow director. The controlling shareholder and the actual controller are in charge of both the whole company and the board, its power in the company more than shadow director who only affects the board. The appointment of shadow director relies on three factors:first, the dark position; second, the formal board; third, the behavior of the board of the company automatically in the control of the shadow director’s instructions.Similar to the formal board, shadow director also takes on the legal obligations and responsibilities. Based on the Equity that the shadow director should undertake the obligation arising from the trust relationship, the basic obligations of shadow director consist of faith obligations, duty of care and duty of loyalty. Additionally, considering the distinction of different types of positions the shadow director takes, the obligations vary considerably, which shows that shadow director proves to be a kind of special director who is responsible for the company and stakeholders whose interests are damaged. This is the so-called responsibility for the company and the third party. The responsibility for the company, due to shadow director violating the faith obligation, duty of care, duty of loyalty or its unique special obligations, which causes the loss to the company, belongs to the internal responsibility; the responsibility for the third party, owing to the damage of the third party’s legitimate rights resulting from shadow director’s behavior, belongs to external liability, which also can be included in liability for tort.Our country can use British shadow director system for reference, for Britain not only formulates the concept of shadow director in the Statute Law, but also attaches more importance to the shadow director in the Case Law. And the greatly positive influence of the British shadow director system lies in the protection of the interests of the companies’ creditors, and the prevention of the shadow directors in avoidance of their responsibilities as well. At present, our country has not introduced the concept of shadow director yet, but uses the method of "actual control" statement from the American Law. Although we can, to some certain extent, solve the problem the controlling shareholders and the actual control brought, we have not yet achieved the purpose of optimizing corporate governance structure, in that the problems the shadow director brings are still remaining. Meanwhile, the lack of a shadow director system for our country produces a lot of drawbacks of our judicial practice, such as the damage of the limitation of connection transaction, the failure of the implement of the liability for compensation, and the impact of the guarantee limit and so on. Therefore, referring to the British advanced experience, the rapid establishment of shadow director system in our country turns out to be a necessity. In stead of the eagerness for success in the process of setting up the shadow director system, our country should confirm the concept and characteristics of shadow director through the release of the instructive cases by Supreme People’s Court for a start. And then publish related judicial interpretation to regulate, and finally register the system in the Law Code at a proper time.