Study On The Limitation Of Liability Of Directors

Limitation of liability of directors, mainly refers to the limitation of civil liabilityfor the breach of the duty of care rather than the duty of loyalty directors. Moderntrends with the Company Board of Directors centrism enhanced the rights of thedirectors of the Company (hereinafter referred to as “directors”) expanding thedirectors holds tremendous power against its own obligations, more and more abuseof power. Accordingly, to safeguard the interests of third parties outside the company,shareholders and the company, and strengthen directors’ liability legislation, theestablishment of directors of accountability mechanisms has become a general trendof the countries. However, too strict requirements will potentially reduce the power ofthe director of innovation and risk the ultimate impact to maximize the developmentof the company and the interests of shareholders. Therefore, mechanisms angle fromthe limitation of liability of directors of the Company, the directors’ liability insurancesystem, to provide protection and rational use of power as a director of directors’accountability mechanisms serve their purposes.Although in the field of legal theory, or in the legal system, the regime ofdirectors’ liability limitation has not yet formed a complete set of theoretical andlegislative support in China, it as a pending legislative gaps design has its own uniqueresearch value. Focus and emphasis on the protection of shareholders ’equity at thesame time, the directors of the country will also face greater occupational risks, inorder to balance the rights and obligations of the directors, the directors’ liabilityinsurance in China’s development is necessary and feasible. Based on this background, I hereby choose to conduct analysis on the theory of the limitation on the directors’liability, seeking to outcome some valuable ideas in this paper.This thesis will firstly discuss about the basic theory of directors’ liabilitylimitation regime. Secondly, it will introduce and compare the legislation of directors’liability limitation in developed countries. Taking our domestic regulation intoconsideration, this thesis will illustrate the necessity of establishing a regime ofdirectors’ liability limitation in our legal environment in the third part. Finally, thefourth part will try to construct a directors’ liability limitation system in detail.