Judgment On The Effectiveness Of Illegal Self-dealing Behavior Of Directors And Executives

Article 148(1)(4)of the Company Law requires the company's directors and senior executives not to violate the provisions of the company's articles of association or enter into contracts with the company without the consent of the shareholders' meeting or the general meeting of shareholders.However,the company law does not clearly stipulate the effectiveness of self-transactions in violation of this article.This has led to many problems in our country's current methods of judging the effectiveness of illegal self-transactions and their final results.In judicial practice,when courts used mandatory types of methods to determine the effectiveness of self-dealing behaviors against directors and senior executives who violated the provisions of Article 148(1)(4)of Article 148 of the “Company Law”,local courts had mixed opinions on judgments and handled The results differently:In the same case,in violation of the same legal provisions,when judges invoked the type of mandatory provisions to make judgments,there were actually two very different types of validity and management,and the effectiveness of the results was very different.This paper questions both the theory and the judicial practice on the use of mandatory normative classification methods to judge the effectiveness of self-dealing.Based on foreign relevant legislation practices,the author proposes a method of using procedural fairness and substantive fairness to judge the effectiveness of illegal self-dealing behaviors.It mainly considers two factors to determine the effectiveness of the illegal self-dealing behavior:whether directors and senior executives have performed relevant procedures in self-dealing and Whether the self-dealing behavior is accord with the company's interest.The self-dealing behavior that has not passed relevant procedures and also harmed the company's interests is surely invalid;The self-dealing behavior that does not harm the company's interests,but has not passed the relevant procedures is divided into three types depending on the circumstances:effective,invalid,and revocable.