An Empirical Research On The Breach Of Directors' And Officers' Duty Of Diligence

The duty of diligence of directors,supervisors and senior executives(hereinafter referred to as "executives")manifests a country's level in the field of corporate legislation and indicates a country's level of judicature.Currently,perfecting the system of Corporate Governance is an extremely important subject in the commercial field,while the responsibilities and obligations of directors,supervisors and executives are an important component of that subject.In 2005,the system of duty of diligence was introduced by Company Law of the People's Republic of China(hereinafter referred to as "Company Law"),but it was covered by a general clause without more detailed rules.In this paper,the author,using empirical research method,explores judges' train of thought in identifying directors' and executives' violation of duty of diligence to searching some ways to perfect our system of duty of diligence,through the collection and analysis of judicial cases.Except for the introduction part,this article is divided into five parts,totaling more than 30,000 words,summarized as follows.The first part mainly describes the research methods of this article and the source of the cases,briefly introducing the empirical research methods and illustrating that the main source of cases is the case library of pkulaw.cn.The second part is the statistics and data analysis of the case sample.On the one hand,this paper conducts a statistical analysis on conditions of judges' identification of directors' and executives' violation of duty of diligence from a general perspective,such as the distribution of case closure time,area and the level of trial;on the other hand,this paper analyzes the case sample from different perspectives,such as the litigation type of company,litigation body,case cause and characteristics of court trial.Through the statistical analysis,the author finds some features of those cases,such as the slightly lower proportion of directors and executives who were identified to be in violation of duty of diligence than the proportion of those who weren't identified to be,the upward tendency of the number of this kind of cases,and the great reverence between the occurrence of this kind of cases and the level of regional economy development.In the third part,the author mainly analyzes the identification of directors' and executives' violation of duty of diligence combined with case analysis.First of all,a brief introduction of duty of diligence was given,mainly related to the concept of duty of diligence and standards for conduct.Second,owing to the limitation of subject stipulated by Company Law,before the analysis of the identification of the violation of duty of diligence,the author make a brief analysis of the identification of directors and executives.Finally,the author attempts to classify the breach behavior of duty of diligence into acts and omissions,on the basis of which the author summarizes the factors that were considered by judges in the process of identifying the violation of duty of diligence.The fourth part is mainly about the application of the business judgment rules in the cognizance of the violation of duty of diligence,expanding the discussion from two aspects—the theoretical basis and application elements of business judgment rules,and the judges exploration of applying business judgment rules in adjudication.After analyzing the theoretical foundation of the business judgment rules,the author elaborates the four application elements of the business judgment rules one by one.Finally,combining with typical cases,the author illustrates two characteristics of judges' exploration of the business judgment rules: for one thing,our country's application elements of business judgment rules are less than that of the United States;for the other thing,the purpose of applying the business judgment rules is to use this idea to carry out the substantive examination of the case,while the purpose of American judges is to exempt the substantive examination of the case.The fifth part mainly discusses the ways to perfect legislatively our country's system of duty of diligence,putting forward three proposals: stipulating the objective criteria as the identification standard of conduct,classifying the breach behavior of duty of diligence and introducing business judgment rules into Company Law.