A Case Analysis On Company A Took Lawsuit Against Li, Song Mou Of Violation Of Directors Obligation

The board in a company undertakes business functions such as decision making and operational performance of the company management, and the directors were given extensive powers. From the perspective of protecting the interests of corporations and shareholders and constraining directors' powers, the law imposes the directors' duty of loyalty and duty of diligence. Directors will bear corresponding responsibility for violation of these two obligations. Meanwhile, considering all kinds of complex market risk from the company management and operation, mistakes during the process when directors fail to fulfil the duty of diligence often causes huge damages. The use of strict liability on directors can not only be a warning for them to fulfill their accountability better, but also discourage management enthusiasm of directors. Therefore, from the perspect ive of inducing the development of the company, directors' liability exemption mechanism should be perfected, and measures on the appropriate relief to protect the Directors' finacial situation and balance of the company's operating risk should be taken.This paper selects a case on the director in violation of the obligations and shall bearing the liability for compensation,by starting from the source of directors of the company's liability and giving a brief analysis of the directors' duty of loyalty and duty of diligence, Combined with the relevant regulations on Liability of directors in some countries. This paper draws forth related question on directors' Liability and exclusion of liability and proposes suggestion on the scope and manner of directors' liability exemption, as well as the path from the legislative, judicial and corporate autonomy, to perfect the system of exemption from liability of directors.