On The Determination Of Company Director’s Breach Of Duty Of Diligence

With the rapid development of economy increasingly fierce business competition.more and more companies begin to adopt a moreefficient and professional board-centered corporate governance model,the role of directors in the company’s operation and decision-making process is increasingly prominent,and the power of directors has been expanded unprecedentedl.In order to urge company directors to exercise their power prudently and prevent the company property loss caused by improper exercise of power,China introduced the duty of diligence system of directors in the process of revising the Company Law in 2005.The introduction of the duty of care system is a significant progress in China’s corporate legislation.However,the current legislation in China is unduly sweeping in its provisions on the duty of care system of directors,which leads to the weak applicability of the system.By sorting out the legal norms on the director’s breach of duty of care,it can be found that the current legal norms on the director’s breach of duty of care in China neither clearly stipulate the concept of the director’s duty of care,nor clearly stipulate the identification standard and specific behavior type of the company director’s breach of duty of care.This also causes the prominent problems in judicial practice,such as the confusion between duty of loyalty and duty of diligence,the inconsistent identification standards and the unclear positioning of commercial judgment rules,which greatly affects the role of the duty of diligence system of directors.Coincides with the fact that the revision of the Company Law has been incorporated into the legislative plan in China,and in the process of revising the Company Law,the concept of the duty of care of directors should be clearly stipulated,and the criteria and specific behavior types for identifying the violation of the duty of care by company directors should be clearly stipulated.Therefore,the system of directors’ duty of diligence can play a prominent role in guiding directors to regulate their behavior,preventing directors from abusing their power and safeguarding the legitimate interests of the company.The relationship between the director and the company is the basis of the director’s duty of diligence.As for the relationship between company directors and companies,there are three theoretical controversies in the field of trust relationship theory and agency relationship theory and appointment relationship theory.The point of view of appointment relationship should be adopted in the relationship between directors and the company,which not only conforms to the corporate governance model of board-centered doctrine,but also conforms to the purpose of setting up the system of directors’ duty of care.About the introduction of business judgment rule,there are two points of views in the academic circles of our country,which are subjective criteria and objective criteria.the business judgment rule is statute law in violation of the company directors diligence obligation cognizance standard to specify the product of our country can completely backwardness to first in the legislation of directors violate standard of diligence duty to clear,no need to introduce a system of business judgment rule.The determination of the directors’ breach of duty of care is also the focus of attention of other countries Only by making accurate determination of the director’s breach of duty of care,can we give full play to the function and value of the director’s duty of care system.In extraterritorial legislation and judicature,there are three methods to identify directors’ breach of duty of care: subjective criteria,objective criteria and one that combined with subjective and objective criteria.Through the investigation on the use of the standard of the three Identification criteria outside,the standard combining subjective and objective criteria not only with correspond the current level of economic development but can also effectively avoid the deficiency of the subjective criteria and objective criteria,and be more advantageous to realize the substantial justice.Our country should be clear in the legislation in combined with subjective and objective criteria for determining whether a company director violates diligent obligation standard.The full application of directors’ duty of care system in judicial practice do not only depend on clear abstract identification standards,but also depend on the elaboration and concretization of the identification standards for directors’ violation of duty of care by means of judicial interpretation and case guidance.In the directors’ duty of violation of due diligence on the concrete determination of whether should the directors is required to attend the meeting of the board continued attention company whether to business decisions carefully whether the professional ability to actively monitor whether on the kinds of behaviour or the disclosure of information in accordance with the law judge whether a company director constitutes a violation of diligence duty.In addition,when specifically judging whether a director violates the duty of care,several factors should be taken into consideration,including the industry and size of the company in which the director works,the actual status of the director in the company,the professional background of the director and the factors stipulated in the articles of association.Only in this way can we more accurately identify whether the company directors have violated the duty of diligence and effectively safeguard the legitimate interests of directors and the company.