| Under the duty of loyalty, Corporate Opportunity Doctrine forbids a director, officer or managerial employee from diverting to himself any business opportunity that “belongs” to the corporation. It is founded on the basic idea that those in positions of trust and confidence cannot be permitted to abuse their positions to enhance their own economic interests at the expense of their employers.Our country introduced the idea of usurping corporate opportunity in Article 148 of Company Law, which prescribed that no director or senior manager may, without consent of the shareholders’ meeting or shareholders’ assembly, seek business opportunities that belong to the company for himself or any other persons by taking advantages of his powers. As for specific rules to apply in deciding whether there is a business opportunity or what constitute defenses of usurping a corporate opportunity, there has been no law or regulation promulgated regarding these two issues.For the purpose of utilizing business information efficiently and encouraging the pursuit of justified rights, Courts all over the world have developed mechanisms for allocating interests between a corporation and those who manage it, allowing for directors and other managerial personnel to properly exploit a business opportunity when the opportunity“ does not constitute a corporate opportunity”, “can not be undertaken by the company”, or“ is diverted to the director with the consent of the company”.Chinese courts have also recognized some defenses raised by directors or managers in cases rising from usurpation of corporate opportunity. According to these existing Chinese cases and in light of American and English case law, this paper suggests that in future application of corporate opportunity doctrine, China should be more careful in finding lack of corporate opportunity or corporate inability to take business opportunity and strictly adhere to requirement of the corporate approval defense. |
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