Reserach On Director’s Duty Of Care

Directors’ duty of Care was prescribed in the Company Law. From the analysis on 21 related court cases, we can find that the defects of the system can be reflected by the unclear content, different standards for judgment and lack of limit standards for director’s duty. Specifically, the courts usually adopt "objective standards" and subjective-objective combination standards" to judge its contents; in judgment standards, they also use two different thoughts:formalized or substantial reviews on the director’s operation and management activities; and in limit standards of duty, only few courts award the defendant to bear part amount of the accuser’s loss, with the most awarding the defendant to bear all of the proved accuser’s loss.By studying the related systems or doctrines at home and abroad, we can find that the issues above have already been discussed or specified. About the contents of director’s duty of care, Britain and the US, Germany, and Japan all have different ideas:British and American laws use subjective-objective combination standard, Germany uses expert standards while Japan adopts good people management standards. Domestic scholars have the following suggestion:with priority to objective standard and complemented by the subjective; purely take objective standard as legally general judgment standards, and choose faith path as the judgment standards. While the British diverges with the American in director’s duty award standards, in that the British uses grievous faulty standards while the American uses commercial affairs judgment principle. In china, some scholars suggest introducing commercial affair judgment principle, and also some advocate "normal operation standard". Director’s duty limitation is mainly carried out by legislation, limitation or exemption by articles of association, and individual recognition by company or director’s duty insurance.After exploring related systems and doctrines at home and abroad, and the current judicial status in our country, the thesis gives the following modification suggestions about company director’s duty of care system. Firstly, identify the contents of director’s duty of care by "moderate standards", allowable of detailing and supplement to the rule. The court shall take into consideration the following factors while making any decisions:director’s position in his company, the industry or type of the company, company size and operation status. Secondly, introduce commercial affair judgment principle by legislation and take it as the demarcation point for substantial review on directors. Thirdly, perfect the limit standards of director’s duty. Director’s duty can be limited by the article of association and shareholder’s meeting resolution, excluding the cases of director’s violating duty of loyalty, director’s deliberation in violating duty of loyalty and director’s other illegal acts. And in addition, director’s duty can also be limited or exempted by three methods below---identify the quota of director’s liability for damages; establish company compensation mechanism and director’s liability insurance mechanism.