A New Probe Into The Duty Of Diligence

Since it was formally established in China's corporate law,the Duty of Diligence has been the object of continuous research in the fields of corporate law of China.However,the duty of diligence has its complexity and evolution.The theoretical research on the duty of diligence by Chinese scholars generally lagged,and there are also many omissions in empirical research.In the absence of mature theoretical support,the text of the Company Law has not specifically revised the principle standards of the duty of diligence for ten years,and the judicial level has not been able to provide authoritative explanations on the judicial standards of the duty of diligence,which has led to difficulties in the application of the duty of diligence in the judicial practice of Company Law in China: different judgment standards,difficult to determine the basis of the right of claim and other issues emerge in endlessly.A series of problems,like the dominoes,make the theory of the duty of diligence become a "deep-water bomb" in the corporate governance of China,which implicitly threatens the protection system of shareholders' interests and even the whole corporate governance system.The threat of this "deep water bomb" has been greatly enhanced with the "awakening of Chinese corporate governance " in recent years.The duty of diligence is an important part of modern corporate governance.In modern time,where the trend of globalization of corporate legal text competition and corporate governance environment is intensifying,the theory of the duty of diligence is showing its increasingly important legal value.According to the world's two authoritative reports,China's current corporate governance and business environment have a large room for improvement,or far from the world's advanced countries and regions in other words.One of the reasons is the duty of diligence system of Chinese corporate law considered to be defective,and the liability of the director company manager for breach of diligence obligations is imperfect,and there is no effective relief way.The imperfection of the duty of diligence has not only affected the effectiveness of judicial decisions in China,but also affected the international evaluation of corporate governance in China.In order to improve the level of corporate governance in China as soon as possible,so as to maintain the company's operational value,promote the stable and healthy development of China's capital market environment,improve the evaluation of the investment environment of China,and thus enhance China's economic competitiveness,it is necessary to improve the regulation system of the duty of diligence of directors,supervisors and senior managers in China's Company Law as soon as possible.Firstly,for the textual defects of the duty of diligence in China's Company Law,the problem that the applicable subject of the duty of diligence is too limited should be solved preferentially.The regulatory subject of the duty of diligence should be expand to the controlling shareholders and even the actual controllers.This is not only in line with the general theory of domestic and foreign academia,but also in line with Chinese judicial practice.Secondly,for the plight of application of the duty of diligence showed in the judicial judgment in recent years in China.First,whether the articles of association of a company can restrict or even exclude the provisions of the duty of diligence since the emergence of the General Principles of Civil Law? Because the duty of diligence clause belongs to the trustee clause in the Company Law and should be regarded as an unconditional mandatory clause.It can be known that the articles of association that restrict or even exclude the provisions of the duty of diligence should be regarded as invalid;second,the basis of the right to request,the provisions of Articles 149 and 112 of the Company Law cannot be used as the basis of the right of claim alone in litigation cases concerning the duty of diligence of the senior managers the company such as directors and supervisors.Because both of which are incomplete terms,and need to be concluded with the rules with legal consequences to form the basis of the right of claim.Finally,China's domestic theory of the duty of diligence has lagged far behind the continuous evolution of the theory of it.With the enrichment of the theory of corporate fiduciary duty,in order to clarify the difference between the duty of diligence,loyalty,good faith,the judgment of the duty of diligence is even more important.Extraterritorial judgment experience shows that most countries with advanced mature corporate law governance systems use the combination of subjective and objective criteria as the basis for judging the duty of diligence.Based on the analysis of the legal basis of extraterritorial experience and diligence obligation,in order to improve the judgment standard of diligence obligation in our country,in order to improve Chinese judgment criteria of the duty of diligence,subjective conditions should be added into the principle standard of diligence obligation judgment in our Company Law,and the general objective judgment standard of "reasonable and prudent person" should be established with operability through judicial interpretation,policy documents and guidance opinions.In addition,because the abuse of the duty of diligence will hinder the company's normal decision-making operations,and the sound development of corporate governance.Therefore,it is necessary to consider introducing appropriate exemption conditions and applying different standards to different types of companies.