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Research On Judgment Standards Of Usurping Corporate Opportunities

Posted on:2021-02-10Degree:MasterType:Thesis
Country:ChinaCandidate:R Y ZhuFull Text:PDF
GTID:2416330629984532Subject:Civil and Commercial Law
Abstract/Summary:PDF Full Text Request
Usurping corporate opportunities is originated from corporate opportunity doctrine in common law.Section 1,Article 148 of The Corporation Law of China,regulates the behavior of violating the duty of loyalty,and provides the legislation basis of the behavior of usurping corporate opportunities.However,the regulation just specifies in principle,and it lacks of operability of recognizing the behavior of usurping corporate opportunities.Based on this background,using comparative method,analytical method,system analysis method and other multiple research methods to study corporate opportunity doctrine,this article discusses drawbacks of present legislations and judicial practice.Also,relevant extraterritorial classic cases and legislation models are used for reference.This article aims to clarify the train of thought of judgment,clear up the judgment standards for the behavior of usurping corporate opportunities from the aspects of identifying factors and defense factors,and to perfect the corporate opportunity doctrine of China.The main body of this article includes four parts,whose general idea is as follows:The first part is raising the problem,which analyzes the multiple dilemmas of current legislation and judicial practice in relation to the judgment standards of the behavior of usurping corporate opportunities.As to current legislation,there exist different loopholes and conflicts whether in The Corporation Law of China or relevant codes of practice before or after the issue of corporation law,and the improvement of legislation is of necessity.As to judicial practice,by enumerating representative cases of current judicial practice of China,two aspects of problems are found.On the one hand,the relationship of identifying what the corporate opportunity is and the disclosure rule is not clarified,and the function of disclosure rule in identifying the behavior of usurping corporate opportunities is indistinct.That is to say,the train of thought of judgment is not clear.On the other hand,different courts in different places and of different levels have serious divergence as to the judgment standards of the behavior of usurping corporate opportunities,leading to the facts that similar cases are treated in different ways.At the same time,the relationship between the behavior of usurping corporate opportunities and that of non-competition should be clarified.In current judicial practice,when two behaviors are snarled,many courts tend to dispose inappropriately such as treating them as the same behavior,being mistaken in using legal forms or just using general terms of duty of loyalty.The second part is about the development of the judgment standards of the behavior of usurping corporate opportunities in comparative law and their comments.In a view of both common law system and civil law system,this part generally introduces different judgment standards of the behavior of usurping corporate opportunities in different jurisdiction,and some comments are included.In US jurisdiction,“Interest or Expectancy Test”,“Line of Business Test”,“Fairness Test” and “Two-Step Analysis” are main judgment standards in the history;and Professor Clark's opinion of “different corporation different criterion” exists.The tendency is the gradual blending of different standards.Moreover,corporate opportunity waivers,which authorize articles of association to specify the scope of corporate opportunity in advance is the new tendency.In UK jurisdiction,‘Non-Profit' and ‘Non-Conflict' are two principles laying a foundation of strict legislation model.Although the later “Mature Opportunity Principle” includes more factors in judgment,insisting to strict model is not changed.For civil law system,German transplants corporation opportunity doctrine in form in the duty of non-conflict of interest in German Corporate Governance Code.France transplants functionally,and emphasizes the combination of fact of cases and basic legal principle.Japan and Taiwan District only prescribe the duty of non-competition,but Republic of Korea transplants the legislation model of the US.The third part aims to analyze the identifying factors of the behavior of usurping corporate opportunities.As to objective manifestations,there exists the possibility of usurping corporate opportunities whether the opportunity is not known or has been mastered by the company,and this article emphasize on the former,so two premises should be cleared when establishing the identifying factors of our country.One is that US jurisdiction is a better choice than UK's for our transplant,another is that the opinion of “different corporation different standards” does not fit.This part introduces the dynamic systems theory,and put “taking advantage of one's position” as well as “business scope” as two main factors.Taking advantage of one's position includes not only the direct use of position process and status,but also the indirect use of corporate resources.The meaning of ‘business scope' should be clarified in essence,rather than the business scope registered on the industrial and commercial registration.The degree of importance of the opportunity to the company,the matched-degree of the opportunity and corporate resources,the history of previous transactions are other factors to weigh.At the same time,using tort law should be avoided in judgment,whether there is damage is not an identifying factor.Finally,the relationship between the behavior of usurping corporate opportunities and the behavior of non-competition should be clarified,especially when the two behaviors are snarled,the behavior of non-competition should be get rid of.The fourth part is the defense factor of the behavior of usurping corporate opportunities,which supplements the third part.This part analyze the condition when directors are able to use corporate opportunities,including disclosure rule,financial inability of the company,third party's refusal and company's well-informedness of previous transactions of directors.For the defense of disclosure rule,the disclosure of directors as well as the response of the company is two bases.There exists several misunderstanding and shortages in current study;in the future the independence of disclosure rule should be clarified,and the full-disclosure rule should be established.As to the scope of disclosure,comparing the two legislation models in the US,safe harbor rule should be transplanted to actively guide directors to disclose corporate opportunities.Courts also should transform the train of thought of judgment and put disclosure rule in the first place.As to the defense of financial inability,it should be divided into two parts based on whether it is insolvent.Mere lacking of financial resources during normal operation should not be deemed as a defense,and disclosure rule should be followed.The defense of third party's refusal should be analyzed based on different conditions to judge whether the attitude of the third party could be reversed,and disclosure rule also plays a part.Finally,if the company has shown that it has given up similar opportunity in previous transactions,the defense should be supported.
Keywords/Search Tags:Usurp Corporate Opportunities, Take advantage of one's position, Business Scope, Disclosure Rule, Non-competition
PDF Full Text Request
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