Study On The Disgorgement Right In Company Law

Disgorgement right in Company Law is the right that directors or senior managers should disgorge unauthorized profits obtained by breaching the loyalty duty to the company.In recent years,with the number of the lawsuits about disgorgement right steadily increasing,there is some consensus and disagreement in judicial practice to the problem of exercising disgorgement right.Considering that,with the written judgements related to disgorgement right as the research objects,this dissertation discusses,introspect and summarizes practical views and then systematically studies related issues.Apart from the conclusion,the dissertation is composed by five parts.The first part introduces the research background,research status,and methods.In the means of empirical analysis,comparative analysis and historical analysis,it is discovered that theoretic study about disgorgement right is rather weak and there are some problems of application of Company Law.The second part is about theoretic introduction about disgorgement right.This part accounts for the concept and states that it is the conflict of interests that the disgorgement right intents to regulate;next,elaborates the overview of extraterritorial legislation and the evolution of domestic legislation in disgorgement right to emphasize that disgorging profits is one of the responsibilities of breaching the duty of loyalty;additionally,after briefly teasing and evaluating the academic controversy about the nature of disgorgement right,this dissertation suggests that disgorgement right is a right to claim which is based on a special type of creditor’s right.The third part analyzes subjects and target objects of the right.As for subjects,both of the company itself and shareholders can exercise disgorgement right in a way of litigation.Directors,senior managers and supervisors are target objects of the right.In this part,the dissertation mainly analyses the identification of directors and senior managers combined with case study.It is discovered that courts identify directors by nominal criteria but senior managers substantive criteria.The fourth part introspects and concludes experience of judicial practice in three typical types of breach of the duty of loyalty including non-competition,self-dealing and appropriating corporate opportunity.In the part of non-competition,we find that courts tend to consider whether there is an actual conflict of interests rather than the same business scope in commercial registration to affirm the existence of competition.Whether former directors and senior managers still undertake the duty of non-competition in the condition of no contractual obligation,there is no agreement in judicial practice.In the aspect of how to approve the competitive business,we propose that the approval should be respective and advance referencing to the practice of Taiwan.As for self-dealing,we analyze the divergence of the application of law for indirect self-dealing and suggest that indirect self-dealing can also be regulated by disgorgement rules in the way of amplifying the interpretation of Article 148 of Company Law.Besides,it is found that courts are inclined to extensively interpret shareholders’ approval in contractual disputes.When it comes to the existence of corporate opportunities,several factors including willingness of the third party and the company,the overlap of business scope,the corporation’s capability,substantial effort and the principle of fairness,are tended to be considered in judicial practice.The last part relates to the calculation of profits.We generalize the calculation of profits in the cases of competing with the company,appropriating corporate opportunity and self-dealing.Finally,we introduce experience of limiting disgorged profits in Common Law and propose to adopt the causality to limit the scope of account in some cases.