Research On Corporate Opportunity Doctrine

Corporate Opportunity Doctrine, which prevents the directors from usurping the business opportunities which should have belonged to their own companies, is developed by the common law countries. It is derived from prejudication. In the common law countries, the judges are apt to regard the business opportunities as property that belongs to the company, so that not to usurp the trade opportunities is considered as one of the director's duty of loyalty. After about 100 years'time, during which these countries paid great effort to perfect it, Corporate Opportunity Doctrine was introduced into many other civil law countries such as Japan and Germany.Our nation confirms the Corporate Opportunity Doctrine as the statute law in the new corporate law. It implicates the progress that has been made in this field. But due to that the doctrine is not confined in system and it lacks detail and executableness as well as there are too many divergence of views about it, how to adapt this doctrine to reality in a perfect and accurate way becomes a great problem for both the doctrinarians and practicians.This article aims to analyse the nature of the Corporate Opportunity Doctrine and to study the content of the doctrine and the currnet functioning law of our nation is highly concerned. It also concludes the study of the history of the Corporate Opportunity Doctrine and the introduction of the related research done abroad. The main body of the article reads as follows:Part One is the reflection of the history about the evolution of the Corpor-ate Opportunity Doctrine. With several classic cases, this part presents the evolution of the Corporate Opportunity Doctrine in the common law coutries. It introduces how the doctrine works in the civil law countries. What's more, it summarizes the speciatlities shown in the development of the doctrine.Part Two studies the foundation of the Corporate Opportunity Doctrine. It's devided into two aspects. On one hand, it regards the business opportunities of a company as a special benefit, which is the property of the company. On the other hand, it concerns where the doctrine derives from. In my opinion, it derives from the special relationship among the director and the executives, which is a part of duty of loyalty.Part Three studies how to confirm the standard of Corporate Opportunity Doctrine. That is to say how to make sure whether a business opportunity is a part of the corporate opportunities. And the realization of the law is the core of the doctrine. After comparing the important criteria of Interest or Expectancy Test, Line of Business Test, Fairness Test, ALI Test and Dr. Clerk's points of view, the article focuses on the hot spot about how to affirm corporate opportunities. And the attention should be paid to the subject of duty and the nature of the trade opportunities. In my point of view, the subject of duty should be confined to the circle of directors and executives, excluding controlling shareholders. To affirm the corporate opportunities, I recommend three creteria: 1. Whether the director or the executives take advantage of his specific status. 2. Whether the trade opportunities are closely related to the company's business operation and whether it is a significant opportunity to the company. 3. Whether the person or organization who offers the opportunity has announced that the opportunity is for the company.Part Four studies how to make best use of the corporate opportunities. In some certain conditions, the director or the executives of a company are allowed to make a proper use of the corporate opportunities, although a certain trade opportunity is considered to belong to the company. It can be any of the following three conditions: non-determined opportunity, waived opportunity and non-performing opportunity.Part Five studies how to make remedies after the corporate opportunity is usurped. People who usurp the corporate opportunity break the duty of loyalty, and they should be punished by law. But the trade itself, although driven by the lawless manipulation, is still lawfully valid. Only in this way the interests of the third person and safety of the trade can be protected. There are two ways to make such remedies: 1. claim the disgorgement right. In my point of view, reference should be made in the process of realization of disgorgement. 2. claim the damage compesation right. ie. The company which is deprived of corporate of opportunity can make a claim of demage compensation, if the company's interests are damaged, even though the usurper hasn't got the interests, the company can also ask for compensation from the usurper, if the realization of disgorgement can't make enough remedy for the damage.