Comparative Study On Legislation Of Removal Of Directors Between America And China

With the development of social economy and the growth of the size of companies and other enterprises, the corporate governance structure of the company in 1950 s shows differently. Before 1950 s, with the the company’s core position, the meeting of shareholders has the supreme power, which naturally includes the company’s management on important events and personnel appointment and removal of power and so on. But after 1950 s, with a series of changes of social economy, such as the establishment of the large joint-stock company, the transformation of the shareholders’ original ideas on investment, huge progress of science and technology, intense competition, the industrial division of labor refinement, the professional and technical management and so forth, which make the traditional distribution system of company’s power do not match the development of social economy and the expansion of company. That’s why with the common request on the establishment of a new company’s power distribution system, many countries choose to change the previous company’s governance model, and timely adjust the legislation, so as a vigorous change of company’s power distribution system. After the change above, the board of directors plays the more and more important role in the company’s management and governance, which can be called the centrism of the Board.However, due to the lack of effective company’s monitoring mechanisms, the power of the board of directors is out of control, even once the directors infringe the interests of companies, shareholders, especially the minority shareholders. In order to strengthen the supervision of the directors of the Company, effectively restrain the over-expansion of the powers of the board of directors,many countries almost have the same ideas. Under the development of the situation, the countries above take an active part in strengthening supervision of the directors, the removal system of the company’s directors timely comes to a birth.At present, legislation of this system in many countries is more mature, and plays the expected functions in the practice, such as optimizes the company’s management, effectively supervises the behavior of the directors, protects the legitimate rights and interests of the shareholders. While removal system of directors in China is much more simple and principled, also it does not play the expected functions in the practice of China. And at the same time, the scholars and professors in our country tend to do a study on the election of directors. That is why the system has been ignored or forgotten by people. In other countries, especially in the USA, removal system of directors is so developed and plays an important role in the development of the companies. By the comparison of removal system of directors between America and China, we will have a good understanding of their big differences. So, studying and absorbing the USA’s developed removal system of directors to effectively guide Chinese legislation becomes much more essential.This article is divided into four parts as below.The first part introduces the legal meaning of the directors’ removal system and its legal origin and function. First, it defines the scope of the directors, and then explains the concept of the removal of the directors. And at last it analyzes the legal origin and function through a series of theories.The second part of this paper introduces the legislative status and characteristics of the directors’ removal system in America. By recalling the legislative evolution, we know very well of the development of the directors’ removal system in America. And then after introducing the regulation of the directors’ removal system in America now, we can see a complete directors’ removal system in America. It includes both substantive and procedural aspects of the provisions, and it also gives particular concern of the relief of the director who is being dismissed.The third part of this paper introduces the legislative situation and shortcomings in China. Firstly, it describes the regulations of the directors’ removal system in our country through Company law of the People’s Republic of China and so on. After analyzing the regulations as above, we know that many shortcomings of the directors’ removal system in our country, including insufficient substantive rules and unfair procedural rules, and lacking of the relief to the director who is being dismissed.The last part of this paper introduces some measures of improving the directors’ removal system in China. It compares the differences of the directors’ removal system in America and China, and then, it points out that in our country many companies have the problems of the so-called ‘alone big’, ‘internal person controls’ and so on. So it is necessary to protect the legitimate rights and interests of small and medium shareholders, and pay attention to the long-term development. And it is time to take some active measures, such as regulating that the shareholders have the right to dismiss the directors without any reasons, and give a positive relief to the director who is being dismissed and so on.