Research On Regulatory Compliance Duties Of Directors

In order to pursue interest maximization, corporations would rather to take the risk of breaking law and regulations. Since the 21-century, various scandals arise. The community calls for the corporations to comply with law and regulations in operation. Considering the agent relationship between the corporation and their directors, directors have the duty to run the business of the corporation complying with the law and regulations. The duty of law and regulation compliance of directors in operate consists complying with law and regulations not only in decision-making and supervision, but also in deriving a new directors' duty of establishing a law-compliance system. It seems that this duty of directors is a new field for Chinese scholars. There are relatively a few studies in this field (with different perspective), and gaps in legislation (which provides merely inapplicable principles) as well. However, some foreign countries have comprehensive legislation and practices. This dissertation aims to analyses such law-compliance duty in the Chinese company law context by studying cases from U.S. and Japan, comparing with Chinese status quo, referencing the advanced experiences. Issues that directors need to pay attention in performing such duty, as well as possible obligations when they default would be further discussed. The dissertation develops in following manner:Part 1 explains the background of this research, provides questions, and describes the necessity of law-compliance in operation. A brief history of the development of the contents of directors'duty to operate business complying with law and regulations will be provided. Moreover, related definitions would be set out. As "Introduction", this chapter looks back relevant national and international research, and then presents research ideas.Part 2 reviews the reform in U.S. from denying to confirming such duty of law-compliance. The effects of the Compliance Programs that affirmed by the "U.S. Sentencing Guidelines" would be discussed. Furthermore, this part examines the law-compliance system and'two'internal control system in Japan company law and their relationship to directors'duty of care. Part 3 submits that the law-compliance system is the base and security of the internal control. Points out the problems in practice through analyses the implement of internal control in the listed company. Holds the point of view that the legislator should put the law-compliance, which is the fundamental object of internal control into the Company Law as a prescribed duty of directors. Directors' duty to operate the corporation complying with law and regulations as the third duty, the possibility and significance will be analyzed.Part 4 describes the framework and criterion of law-compliance system and discusses three main issues (motivation, information disclosure, supervision from supervisory directors) in running the system.Part 5 points out that based upon the duty to operate corporation complying with law and regulation, directors are facing duties expansion (such as, raising object, improving the organization, actively publishing without hiding).Furthermore, this part would discuses that if the directors default such duties, the obligations they should take.