Reconstructing The Regulation Of Directors’ Self-dealing

Directors’ self-dealing is a common type of transaction in Chinese enterprises,and it has become the focus of legal supervision because of its two consequences.On the one hand,legitimate self-dealing can effectively reduce transaction costs and improve transaction efficiency,on the other hand,since the director has control over the company,directors may use this power to get illegal interests,and finally harming the company’ interests when there is a conflict of interest.However,the current regulation of illegal self-dealing in China is still at a stage where procedural rules are expected to achieve fair trading,and there are no clear provisions on the effectiveness of illegal trading and legal relief.It has caused chaos of administration of justice and unfair tradings usually happen.Consequently,this paper attempts to reconstruct the legal supervision of directors’ self-dealing behavior,so as to find a way to regulate the unbalanced trading behavior and realize the actual protection of the company’s interests.The dissertation consists the following four parts besides the introduction and conclusion.The first part analyses the characteristics of directors’ self-dealing and the requirements of their duty of loyalty to understand reasons of legal supervision of directors’ self-dealing.After discusses the current regulation in Company Law,I find there are two problems should be solved.Firstly,there is no rules to judge the teeth of illegal self-dealing.Secondly,the substantial guarantee mechanism for company in unfair self-dealing still needs to be improved.The second part mainly analyses cases in empirical study.Because of the legislation,there are also two problems in judicial practice.The first is the confusion of the effectiveness determination in the trial,and the second is that the company’s damage relief is not taken seriously.So as to solve these problems,I try to reconstruct the regulation system of directors’ self-dealingfrom two aspects: the effectiveness rule and the liabilities for compensation.In the third part,I think fairness is the ultimate factor affecting the effectiveness of a transaction,so I build the effectiveness rule from both the procedure and the entity.In the last part,I give some suggestions to improve the liabilities for compensation in the Companies Acts When directors actually harm the interests of the company.