The Liability Of Directors To Creditors Of The Company

The traditional company legal person system consider that the board is a representative of the company, the consequences of the board of directors behavior should be borne by the company. Therefore, even if the board of directors caused damage e to the interests of the creditors of the company, the company is responsible for the creditors of the company. But with the growing power of the board of directors, in the practice of life the board of directors often use their power to damage the interests of creditors. Most of the time the company is unable to repay the debts, this time we should investigate responsibility of the directors with fault. The first part of the article mainly introduces theoretical basis of director’s liability to the creditors of the company, stakeholder theory argues that, as a part of the company’s stakeholders, the overall interests of the company include the board of directors of the company, if the board of directors cause damage to the interests of creditors,it actually harms the overall interests of the company. From this point of view, the board of directors should bear liability for corporation creditors. Many countries and scholars analyze the foundation of director’s liability to the creditors of the company from the view of fiduciary duty of directors. Most countries just recognize that when company entered bankruptcy, the board of directors owes a fiduciary duty to the creditors of the company at the beginning, after a series of judicial judgment, the board of directors owe the fiduciary duty to creditors of the company under normal conditions. Canada and other countries confirm that the board of directors owes a duty of care to the creditors of the company through the case. If the board does not fulfill the duty of care of the creditors of the company, the board of directors must bear responsibility.From the perspective of economics, because the creditors of the company gain interest from the company, it compensates the risk of creditors of the company, this is the main point of market restriction group. However, because of the presence of malicious behavior between the director and the company directors and the creditors of the company may implement the serious information asymmetry, in many cases interests can not make up for the loss of the creditors of the company, this is the market protection point of view. Market protection provides the economic basis for the responsibility of the creditors of the company.The board of directors liability legislation about protection of creditors of the company is perfect in Japan. China’s Taiwan region basically follow the practice of japan. Japan have the provisions of the responsibility of executives to the third party,directors must belong to the category of executives, the third party include the company’s creditors and shareholders of the company. Japan Inc law stipulates that as long as the board of directors behavior led damage to the company creditors of malicious or gross negligence, the board of directors bear responsibility. Both China’s company law, securities law and bankruptcy law do not include the provisions of the responsibility of the board of directors to the creditors of the company.In China, the protection of creditors of the company is mainly realized by the principle of capital etc. But in real life, the three principles of capital do not very well protected the interests of the creditors of the company of our country. China’s bankruptcy law to protect our creditors is not enough. Therefore, China’s introduction of directors to creditors responsibility system is very necessary.According to the regulations of Japan, if the board of directors of malicious or gross negligence caused damage to the creditors of the company, the board of directors is responsible for the creditors of the company. This slack behavior of directors is what kind of nature in the end. The mainstream point about nature of this behavior is that this behavior is tort liability or legal liability. According to the tort liability of directors to the creditors of the company said that only the implementation of intentional or gross negligence caused the loss of creditors of the company, directors need to bear liability for corporation creditors. Tort liability determines the scope of director’s liability to the creditors of the company is the direct loss to the creditors of the company, the board of directors need to be intentional misconduct or have gross negligence to the creditors of the company. The causal relationship between the direct loss and the creditors of the company directors are relatively simple and clear, the board of directors also only need to take responsibility to individual creditors, many scholars believe that this is a special form of tort liability.According to the legal responsibility that director need not only bear direct losses to creditors of the company,also shall bear the liability to indirect damage to the creditors of the company. The board of directors of malicious or gross negligence behavior makes the company’s property reduced, the property of the company is unable to pay creditors debt, therefore, the board of directors need to assume responsibility for the creditors of the company.The board of directors cause the company into a state of bankruptcy, the board of directors shall be liable to the creditors of the company of the indirect loss, this time the board of directors bear the responsibility not for individual creditors. When the director is responsible for the company’s indirect loss, there is a complex problem that the causal relationship between the intervention. The board of directors behavior led to the company’s property insufficient to pay the debts of the company creditors, there may be other factors involved, this problem is worthy of study and discussion.The subjective elements of director’s liability to the company’s directors is that the board of directors exist malicious or gross negligence. Then what is the standard of malicious or gross negligence, the board of directors in the modern society often make some commercial determine which business judgment is normal which is intentional or culpable. Many countries introduced the business judgment rule, we determine whether the behavior of the board of directors is intentional or gross negligence by the business judgment rule. In fact, the specific criteria of intention and gross negligence of the board of directors is very complex and difficult, this future research is a key and difficult problem.The director’s liability to creditors of the company in the form of what is a very important problem, Generally director and the company is required to bear joint and several liability, such provisions of the law and Japan Inc. It is not just in order to make their own creditor better, the company is responsible for the selection of supervisory duties on board. The company is responsible for the board of directors. There is a plurality of director’s liability to the creditors of the company situation, the board of directors shall bear the joint and several liability.