| Duty Of Care is the legal obligation of corporate executives to use their knowledge, experience, diligence, skills and attain the standards of bona fide manager’s obligations in managing a company’ affairs. Duty of Care differs from Duty of Loyalty, aiming at behavioral approaches, skills requirements of corporate executives to fulfill company’s affairs and a standard to measure whether executives are qualified. In this sense, the process of reaching the completion of corporate governance means conflict and coordination process between shareholders and stakeholders’ interests. All this is manifested in conflict harmonization caused by executives’ Duty of Care for the two parties aforementioned. In juridical practice of Corporation Law, the United States gradually established Business Judgment Rule as the standard to restrict corporate executives’ management behavior to support the successful implement of Duty of Care. However, under Business Judgment Rule, executives accountability requires plaintiffs to bear the very strict burden of proof, which limits executives accountability to some extent and allow discredited executives to escape lawful punishment lightly. China should deal with these problems first of all when introducing Business Judgment Rule. To regulate ways of power flood, implement effective accountability for executives’management responsibility, we draw on the experience of traditional power controlling pattern in administrative law and power controlling pattern in economic law, and try to establish flood control channel of power-restriction theory in company law. In practice of Duty of Care, effective restriction on executives and incentive mechanism is not only the important foundation to improve corporate governance structure, but also the best embodiment of power-restriction in practice. To be specific, power-restriction mode of corporate governance structure can be established by inner corporate governance, Duty of Care system of China’s corporate executives and judicial remedies for executives for a breach of the obligation. |
