Derectors' Duty Of Loyalty

Separation of ownership right and management right is an important feature of modern companies.The mode of company's management has been making such changes that "Board of Directors Be the Centre of Company" gradually replaced "Conference of shareholders Be the Centre of Company". By " Board of Directors Be the Centre of Company ",the directors enjoy wide powers."Where there is power,there is abusing of power.This is an experience that never changed." Montesquieu's famous phrase revealed the need to set up the obligations of directors.Therefore,while the full authorities are granted to the directors for the benefit of a company,we must strengthen the moderate obligation of directors to prevent and reduce abuse of power.Drawing on foreign legislation of the obligations of director's loyalty and referring to the theories of national research,this essay discussed the theoretical basis and the specific content of the obligations of director's loyalty and analyzed rules about the loyal obligation of directors in Chinese new "Company Law".In the first part of the essay,the theoretical basis and the specific content of the obligations of director's loyalty are.discussed.By analyzing the academia views,I expressed my opinions and reasons for them.In my opinion, the loyal obligation of directors means that the director in the management of company business,once his own interests in conflict with the interests of the company,should choose to serve the company's interests,and mustn't make his own profit by harming the interests of the company.The theoretical foundation of the obligations of directors is also a controversial topic.By comparison of several mainstream views on the basis of the relationship between directors and company,the essay established the view that the obligations of directors are special trust obligations which are based on the trust relationship between directors and company.In the second part,the essay talked about the specific details of the obligations of director's loyalty.According to the different specific case of interests conflicting,the obligations of director's loyalty maybe the followed: (a) mustn't benefit through his status;(b) avoiding self-dealing;(c) competing not allowed;(d) snatching the company's business opportunities not allowed; (e) mustn't disclosure the corporate secrets unless authorized.In demonstrating each of the obligations,the essay tried not to miss any cases and not to transcend the range of loyal obligations by firmly grasping the theoretical foundation of loyal obligations and considering details of interest conflicting.In the last part of the essay,the writer analyzed rules about the loyal obligation of directors in Chinese new "Company Law",and made my argument on the inadequacy of the legislation.Through the analysis above,rational and proper construction of obligations of director's loyalty may balance the powers and duties of directors,supervise the directors to serve the best interest of company,and strengthen power constraints between company agencies.