Director Diligence Criterion Of Inquiry

As the foundation and the core of the current national Business Organization,company is the backbone to promote the development of the market economy. Withthe rapid development of social economics, science and technology, the company’soperating has increasingly showed the tendency of being professionalized whichobjectively requires that the company’s business activities must seek high efficiencybased on the profitability. In this context, the idea that the shareholders of thecompany try to deal with each affair is impractical and inefficient. Therefore, thecorporate governance model has transformed from the Centralization of PlenarySession of Shareholders to the Centralization of Board of Directors for furtheroptimization based on the need of high efficiency. The Board which largely controlscompany’s operating and management plays an important role in making the companymaintain a good momentum of development. Therefore, in order to prevent theDirectors from abusing power, protecting the legitimate interests of the company andshareholders，countries have clarified directors obligation and strengthened theliability of directors with legislation. Although directors’ obligation of diligence isformulated by company law in China, it lacks specific criteria and contents. Thispaper intends to provide reference for directors’ obligations legislation by discussingrelative contents of directors’ diligence obligations and analyzing relative experienceof law of foreign countries.Directors’ duty of care discussed in this article only involve in general company’sordinary business practices and related activities, lack of particular industries andcommercial activities for the sake of space and independence of the issue.