Perfection Of Director’s Duty Of Care In China

Although the system of corporate directors’ duty of care has been preliminarily established in legislation in China,it still has some problems,which affect the function of this system.In the aspect of lawmaking,the legislation fails to explain the specific aspect and judgment standard of duty of care,and the rule of liability for compensation lacks systematic construction.In the aspect of judicial practice,the lack of legislative guidance leads to the abnormal number of cases,the difficulty for judges to carry out substantive review,and the lack of uniform judgment standards in different cases.To handle the legal disputes of company directors’ breach of the duty,the settlement mode of tort liability should be chosen,and the fault principle should be clearly taken as the principle of liability.Similar to the duty of care in the civil law,directors’ duty of care should be set as an objective standard,and its value goal and institutional function should be to protect the freedom of directors’ behavior and safeguard the interests of the company.The reasons of illegal obstruction or exemption in the dispute of damage compensation liability in China are all from the legal provisions,so the Business Judgment Rule shall not be introduced now.As for improving the directors’ duty of care in state-funded companies,the micro-mechanism should be strengthened to clarify the individual legal responsibility of directors,and these companies should be recognized in a broad sense,so that the effect of special provisions can be extended to all kinds of state-funded companies.In terms of loss determination and liability investigation,it is imporant for future legislation to add proviso after the current content of article 149 of the company law.Also,it is essential to add provisions in the liability mechanism or authorize the company’s articles of association to specify the circumstances of the company’s loss and the standard for determining the "serious" loss.Last but not least,quantify the amount of compensation should be quantified,a reasonable limit of liability should be set,and the director’s liability insurance system should be gradually improved.In judicial practice,the function of judicial interpretation and the active role of case guidance system should be reasonably used.