Improvement Of Directors’ Civil Liability System In Misrepresentation

The 2019 "Securities Law" strengthened the important position of information disclosure in the construction of the capital market,and comprehensively strengthened the liability for violations of information disclosure.According to Article85 of the law,directors,as one of the information disclosure obligors,are liable for false records in the disclosed information.Investors shall be jointly and severally liable for losses suffered by investors in securities transactions due to misleading statements or major omissions,unless they can prove that they are not at fault.On November 12,2021,the Guangzhou Intermediate People’s Court made a first-instance judgment on the "Kangmei Pharmaceutical Co.,Ltd.case"(hereinafter referred to as the "Kangmei Pharmaceutical case"),which aroused huge social repercussions.According to the fault and behavior of the directors of Kangmei Pharmaceutical Co.,Ltd.in false statements,the court sentenced its directors to bear joint and several liabilities in different proportions for the total investor losses of 2.459 billion yuan.The Kangmei Pharmaceutical case triggered discussions in the academic and practical circles on the civil liability of directors for false statements.The civil liability of directors in false statements has become the focus.It is indeed necessary to clarify the scope of directors’ duty of care,determine the subject of joint and several liability for false statements,and then determine their respective liability shares.First of all,clarifying the scope of directors’ obligations is a necessary prerequisite for determining the subject of accountability.The traditional theory of company law holds that company directors have the duty of loyalty and duty of care.In the process of information disclosure,it is relatively simple to judge that a director violated the duty of loyalty,that is,at this time,the director has intentional misrepresentation and should bear joint and several liabilities.However,the problem arises more where the director merely breaches the duty of care.At this time,the director is only at fault for the misrepresentation,so whether the director should bear the responsibility and what kind of responsibility should be the focus of the issue.Secondly,with the development and transformation of my country’s corporate governance model,the boundaries of directors’ rights are also constantly expanding,and the connotation of their duty of care is also increasing.Boundaries of Directors’ Obligations.Finally,under the premise of applying the joint liability type to the civil liability of directors,the division of the liability ratio is the third major problem that needs to be faced in clarifying the civil liability of directors for false statements.This article will also conduct research around these three major issues,namely,the exploration of the connotation of directors’ obligations,the fault recognition of qualified subjects,and the optimization of the application of joint and several liability rules.The full text is composed of three parts,namely the introduction,the main body and the conclusion.The text is divided into four chapters.The first chapter summarizes the problems of directors’ joint and several liability for false statements under the background of different systems in China and the United States by sorting out the cases of liability compensation for false statements in the United States and China.Among them,due to the implementation of directors’ liability insurance and company compensation system in the United States,the proportion of directors’ personal liability is relatively small;while the determination of directors’ liability for false statements by Chinese courts is still in the exploratory stage,and it reflects the need for detailed standards for determining liability.trend,but the existing problem is that the basis for determining the share of responsibility is different,which has the characteristics of "one case,one judgment".The second chapter tries to analyze the connotation of the duty of loyalty and duty of care of directors in information disclosure.Since there are few scholars in my country who have analyzed the duty of care of directors,the article mainly focuses on typical judicial cases in the United States.The duty of care in the case of omission and the latest development of the duty of care are explained.The third chapter mainly studies the issue of judging whether the directors are at fault in the false statement,that is,determining the subject of civil liability for false statement.According to my country’s "Securities Law" and related documents,the director’s fault mainly includes two situations of intentional and serious violation of the duty of care.Since the judgment of negligence is highly subjective,the article proposes that whether a director is at fault can be determined from objective factors such as the director’s position,the source of the disclosed information,and the content of the information.The fourth chapter mainly studies the sharing rules of directors’ joint and several liability.At present,there is no clear basis for the determination of directors’ joint and several liability for false statements.The article proposes that the civil liability can be determined according to the subjective fault of the actor by referring to the past judicial cases.Finally,it proposes to refer to the limited liability of directors implemented in foreign company laws to further refine and improve the liability of directors.