A Study On The Limitation For The Liability Of Directors' Duty Of Care In U.S.

In modern corporate practice,the ownership and management of enterprises are separating generally,which leads to the consequence that the interests of shareholders and directors may not be consistent.For the sake of avoiding infringement to the interests of shareholders,creditors and investors of the company while directors are in the pursuit of their own interests by sacrificing the overall interests of the company,many of corporate laws and regulations all over the world set duty of care to directors of the company to maximize the interests of the company by executing their duties carefully.Duty of care played a certain role in the prevention of minuses,but the pressure of too much risk of personal damage may be the Damocles Sword hanging on the neck of director,which may result that professional directors in position become conservative,or even reluctant to serve as a director,thus cause detrimental to the development of the company and socio-economic.Therefore,it is necessary to establish an appropriate system for the restriction of director's liabilities to clarify its boundaries,so that the risk of personal liability can be reduced when directors act in good faith and achieve the balance of rights and duties.The long history,mature systems and rich litigation experience and wide academic research made US corporate law a good model that worth learning and exploring for us.For instance,the Business Judgement Rule reduced part of the liabilities prior to the consequences of decision made by directors.Meanwhile,legislation for the directors' liability limitation,corporate compensation and liability insurance will protect the directors who made decision and cause liabilities.In recent years,China has promulgated the "Company Law","Securities Law" and other relevant laws,listing rights and obligations of directors.However,the abovementioned laws only impose very highlighted principles for Duty of Care(In PRC law,"Diligence Obligations"),emphasizing the consequences of directors' personal liabilities rather than the standards and restrictions on such topic.It is very crucial for China to learn from the experience of American system,and set out a corresponding standards and risk transfer mechanism to balance the rights and obligations of directors.More specifically,we should offer such rights to the articles of association of companies to set appropriate restrictions and provide systems like compensations and insurances to fill the gaps of corporate law in China.The thesis,in its first chapter summarizes the status of duty of care for directors in the United States,and expresses the insufficiency of the protection of shareholders' interests caused by directors and the lack of legislation in China and the necessity of reference to the relevant American system.The second chapter elaborates the standard of Business Judgment Rules,as an ex-event standard to determine the responsibility of directors.The third chapter focuses on the post-event limitation of directors' liability from duty of care,including the state legislation that restricts the responsibility of the directors,the compensation system and the liability insurance system of directors.The fourth chapter reveals the shortcomings of the standards and the limitation system of directors in China from the legislative and judicial aspects,and through the lack of accreditation standards in China and US,which caused decisions made by court beyond the provisions of the law itself,or a waste of large judicial resources.Finally,the fifth chapter took the aspect from the essence of duty of care in US and raised certain points for the reference of legislative and institutional authorities about the implementation of directors' liability standard and limited liability systems.The company law serves the economic development and expects the directors to serve and seek best interests for the company.The standards and restriction systems of the duties of directors shall not be ignored.Based on above,the thesis takes the United States corporate law practice as the research object and expects to do much to create standards and restriction systems of liabilities of directors in China.