On Directors Of Non-competition Obligations

Obligation of non-competition, one of the main duties of directors, is a major issue in the modern corporate governance structure, due to the importance of which many countries set detailed stipulations in their laws and statutes. Obligation of non-competition is justified in both economic and legal perspective. As to China, relevant provisions are available in the Corporation Law, but they are too general in terms of contents, arousing difficulty in practical application. This article, through comprehensive scrutiny on legal principles and systems in the international community, probes both the intrinsic meaning and vital significance of non-competition obligation of directors and try to detect the weakness of the non-competition system in China, hoping to promote the advancement by learning from forerunners abroad. The author puts forward 4 principles for the restructuring of China's non-competition system: honesty, balance of legal interests, rights consistency with duties, convenience for litigation, on the basis of which, 4 concrete measures are suggested accordingly: change absolute non-competition into relative non-competition, stipulate the time limit for non-competition obligation, perfect the right of reimbursement, improve liability system.The author firmly believes that a smooth legal system of directors in modern enterprises, characterized with non-competition obligation, will have great significance in perfecting the corporate governance structure and in ensuring the cooperation's healthy development, and it will sure bring us closer to the realization of a society ruled by law.