A Study On The Civil Liability Of Directors To The Third Party

With the modern corporations’ developing and expanding, the shareholders may spread out in different regions. This makes the way to running the corporation with more complications and techniques. And the control to the corporation may face the conversion from shareholders to board of directors. However, with the power rises, there’s no one could restrain the boarding members to abuse the powers, and it would damage to the interests of the corporation, the shareholders, the creditors, and third-parties. For adopt this conversion, all of the countries began to change its traditional corporation laws and legislations, established director’s civil liability to third-parties system and strengthen the protection to third-parties to break director only response to the corporation but corporation has to response for directors’ duty behaviors. China’s market economy is rapidly growth right now, but relevant legislation is very imperfect. Directors’ duty behaviors are lack of constraints and problem of damage to third-parties’ interests is more prominent. This could lead to destroy social and economic order and affect the legal justice.Based on the urgency and necessity to establish the impeccable directors’ civil liability to the third-parties system in China, the author did the research in four sections to understanding the system. In the first section, the author discussed this system’s three basic and key issues which are scope to the directors, scope to the third-parties, and the character and behavior types in the directors’ civil liability to the third-parties. In the second section, the author discussed the legitimacy of directors’ civil liability to the third-parties from theoretical basis and practical necessity. Theoretical basis mainly refers to the corporate social responsibility and the theory of stakeholder’s interests. And practical necessity mainly refers to needs of perfection of the corporate governance structure and protection of the third-parties’ rights. In the third section, the author discussed Anglo-American law system, civil law system, and Chinese law system’s comparative study on directors’ civil liability to third-parties legislative, and summarizes the legislations could learn from foreign experience to reflect the lack of relevant legislation in China. In the fourth section, the author proposed a four-point suggestion to improve China’s director’s civil liability to the third-parties system, which are clearly verified the elements of directors’ civil liability to the third-parties, identified the third-parties’ rights to claim and rights to appeal in the system, imported business judgment rule to establish directors’ liability exemption regime, and established safety system for the directors’ civil liability to the third-parties.