A Study On The Legal Issues Of The Removal Of Directors

In modern society,with the development of economy and the expansion of the company,the scope and number of shareholders are growing.With the change of corporate governance mode and governance structure,the "shareholders' meeting centralism" is becoming out of time,and the shareholder's power is weakening.Instead of the expansion of the director's power,the board of directors has gradually become the core organ for the company to make decisions It is also closely related to the interests and development of the company.Directors master the operation of the company and have a comprehensive understanding of the company's information.The rapid expansion of directors' power makes the lack of effective supervision mechanism to restrict directors' behavior.Therefore,the restriction and supervision of the director's power is particularly important,and the legislation is also constantly adapting to the development situation of the times to make corresponding updates and changes,and the system of director's post removal emerges as the times require.The Provisions on Several Issues concerning the application of the Company law of the People's Republic of China(V)promulgated by the Supreme People's court came into effect on April 29,2019,among which Article 3 provides for the gratuitous removal of directors and the compensation after the removal of directors.Before the promulgation of this regulation,there were several changes in the regulations on the removal of directors.The company law of 1993 clearly stated that the board of shareholders(the general meeting)should not remove the directors before theexpiration of their term of office without any reason.Under the current circumstances,the removal of directors in China was conditional and could not be removed without any reason.However,this regulation was deleted after the amendment of the company law of 2005.It can be seen from the attitude behind the deletion,unless otherwise specified in the articles of association,the general meeting of shareholders can remove the directors whether there is a reason or not.In fact,in the judicial practice and the mainstream view of scholars in China,it has been acquiesced that the director is removed without cause,but it has not been clearly stipulated in the law.The introduction of Judicial Interpretation of Company law(V)has made clear provisions on this,which shows that China's legislation pays more attention to the efficiency of company operation.There are still many problems in the process of changing to "board centralism" in China.Nowadays,the operation mode of the company makes the position of directors more important.Even if it can be removed without cause,there are still a series of problems to be discussed and solved.The most important thing is to realize the balance of interests between the shareholders and the directors in the regulations of removing the directors without cause.The Judicial Interpretation of the Company law(V)emphasizes more on the control of the shareholders(general meeting)over the company,and the compensation for the directors is a general regulation.Therefore,the starting point of this paper is to realize the balance of interests between the two parties.There are two aspects to be discussed in the regulations on the removal of directors without cause.First of all,it is the discussion of the legal relationship between the company and the directors,which is not regulated in the legislation of our country.Most of the management theorists and the practice agree that the relationship between the two is the appointment relationship in the civil law,but there is still a situation of disunity in the application in the practice,resulting in many problems.Therefore,the author thinks that it is still necessary to discuss and improve this aspect,and what kind of relationship can be achieved It is worth studying to better protect the interests of all parties and minimize disputes in the process of practice.Secondly,on the issue of directors' compensation,the provisions of judicial interpretation in China are not clear enough,so it needs to befurther explored in the aspect of directors' relief.In view of the above problems,this paper is mainly divided into the following parts:In the first part,the author introduces the meaning and function of director's dismission,and analyzes the disputes in judicial practice.Secondly,it selects several different countries and regions to study their relevant provisions on the removal of directors and legal relations,and analyzes the legislative changes of the removal system of directors in China over the years.The second part mainly analyzes the advantages and disadvantages of dismission with or without cause from the perspective of interest balance between directors and the company.In terms of the interests of directors and the company,their concerns are different,so they can not maintain the effective balance of the interests of both.Then,the author studies the legal basis behind two different ways of dismission,and concludes that a single legal relationship is obviously insufficient to protect the interests of the directors and the company.It is a better way to combine the non reason dismission of the post with the reason dismission of the contract.The third part first introduces the relevant provisions of the "separation principle" of the removal of directors in German law,and then analyzes the rationality and advantages of the separation principle,and then uses its concept for reference.It holds that there are both appointment relations in organizational law and employment relations in contract law between directors and companies in China.The fourth part is to analyze the legal consequences of the removal of directors under the dual relationship.Firstly,the termination of the appointment relationship in the organizational law corresponds to the compensation of directors stipulated in the judicial interpretation of the company law(V).The author puts forward his own suggestions for the improvement of the compensation of directors in China by drawing lessons from the practice of the civil law system and the common law system;secondly,the employment contract The removal of a director's post by the company involves the breach of contract,so the director has the right to claim damages for breach of contract and better protect the interests of the Director under the dual relationship.