The Balance Between Judicial Intervention And Administrative Intervention In Corporate Governance

Duty of loyalty and duty of diligence concerning directors, senior managers as well as supervisors were first introduced in Chinese Company Law which was revised in 2005. Duty of loyalty is specifically prescribed in legislation and is also widely used in practice. Compared to duty of loyalty, duty of diligence is merely prescribed in a general provision of Company Law. The rough and vague provision about duty of diligence became the initial reason to start the research of this thesis. Although the Chinese scholars started the discussion about duty of diligence before the revision of Company Law in 2005, the rules on duty of diligence in Company Law are still remained as ones 10 years ago. Is it because the relatively abstract duty of diligence is hardly enforced in practice thereby causing the legislators to fail to know how to specify and modify the rules? Or is it because duty of diligence is not highly demanded at the current stage of Chinese corporate law. Therefore, the author wants to widely understand and deeply analyze duty of diligence and to find out the reason behind which causes such dilemma. Besides, the developed countries as representedby Anglo-America have been improving the structure of corporate governance for several times after the financial crisis in 2008. Directors and senior managers were required to perform their duties with higher standard. As a consequence, directors and managers are required to act in due diligence and to enhance the mechanisms of decision-making and supervision, which also sets new requirement for duty of diligence.This thesis will analyze duty of diligence in depth both from micro and macro perspectives with reference to rules in Anglo-American system under the Chinese special legal background. The application of rules on duty of diligence in Chinese practice will be discussed and assessed under the Chinese economic, political and cultural background. On the basis of case study and academic theories both in domestic and overseas, this thesis attempts to understand the situation about the use of rules concerning duty of diligence and to propose some alternative ways in order to improve its use.This thesis is divided into 5 chapters as follows:Chapter 1: the history and evolution about Anglo-American duty of diligence(also called duty of care) will be briefly introduced from the perspectives of the interpretation on black-letter laws for the purpose of having an overall understanding on the connotation and extension of such duty.Chapter 2: The status of duty of diligence in China will be introduced including provisions in laws, administrative regulations, ministry regulations as well as relevant documents issued by stock exchange. In addition, this thesis has collected judicial cases and administrative penalty decisions of CSRC(China Securities Regulatory Committee) regarding duty of diligence of directors and senior managers in the last two years on the basis of continuing the researches of former scholars. Afterwards, the research result in this thesis will be compared with the formers researches to see if there is any change about the use of rules on duty of diligence in practice.Chapter 3: According to the conclusion of case study in Chapter 2, the current status of Chinese corporate governance will be assessed from the perspective of practical use of duty of diligence in China in a comparison on its use in legislation,administrative supervision and self-regulation.Chapter 4: Based on the result of comparison in Chapter 3, this thesis attempts to deeply analyze the practical use of duty of diligence in China and to find out the reasons causing this situation such as relevant ancillary legal system(derivative actions), legal culture, enforcement, different ideas of corporate governance as well as the distribution of company shares etc. Those Chinese legal features will be compared with Anglo-American distinctions and the reason behind the outcome of legal transplantation will be analyzed.Chapter 5: According to reasons summarized in Chapter 4, in order to enhance the effectiveness of legal transplantation, this thesis will propose some opinions and suggestions with respect to improve the effectiveness of Chinese duty of diligence in practice. Furthermore, whether the rules of duty of diligence can be adopted as the way in Anglo-America, for example the introduction and adoption of Business Judgment Rule, will be discussed. If the Anglo-American rules cannot be copied in a rigid manner, are there any alternative ways and practices which are more suitable for China including the duty of directors and senior managers on internal control?...