Research On The Liability Of Directors’ Tort, Viewing From The Comparison Of Chinese And American Corporation Law

With the separation of ownership and control over the company, directors are gradually stepping on the stage of running the company. Corporate Governance in developed counties has transformed from "Shareholder Centralism" to "Board of Directors Centralism". Although the Company Law of the People’s Republic of China provides that, the power of decisions on major issues is still controlled by shareholder; the right of director is still irresistible expanding. In this case, director infringements occur frequently, which seriously affect the interest of shareholders, creditors and other stakeholders. Thus, it is urgent to establish the systems of standard corporate governance, the constraints of directors’rights and the balances of the powers and responsibilities of directors.As successful example of modern corporate governance, USA are worthy for us to refer its experience and lessons. Referring and comparing with American Corporation law and doctrine, and introducing a series of famous cases in the history of America, this thesis is aim to analyze and concludes the director’s duty of loyalty, the inspection standard and burden of proof from the perspective of director infringements, and ascertain where the mechanism of legal responsibilities on violation of director’s duty of loyalty in the related party transaction. Meanwhile, to satisfy every requirements concerning subject of the torts, subject of claim right, the mechanism of accountability, and the methods of undertaking responsibility, this thesis is dialectically put forwarded the limitation and the insurance of director’s liability, in order to effectively prevent director’s excessive duties from losing their enthusiasm in corporate governance. Then the article offers a proposal concerning judicial supervision of Chinese corporate governance and internal governance base on the situation of domination by a single shareholder.First of all, Chinese corporate law introduced the rule of derivative litigation from2005, but related regulations were abstract and ambiguous. As a result, the rule lacks practicability and needs further improvement. Referring to America Law, shareholders has the right in their own name or the board of supervisors (or the boards of directors) has the right in the name of shareholders after they submit a formal and written letter of request, could take actions when corporation and shareholders’ interests are injured by directors Besides, the prepositional procedures set out in Chinese Corporate Law should be annulled during the future amending process in order to better protect interests of shareholders and other stakeholders.Second, regarding corporate inside governance, in order to protect minor shareholders’interests from being exposed to infringe by directors directly and by major shareholders indirectly, it is essential to establish systems of independent director and outside supervisor for improvement on corporate inside governance. The former rule could make a director of expertise in management with non-interest relation with corporation and shareholders take part in the process of decision-making of the director board, examine the responsibility of the directors in advance or ongoing process, and monitor the reasonability of the decision made by the director, especially in related transactions. As for the rule of the latter, since legality and major irrationality of activities by directors are regarded as the most key points of outside supervisors’supervision, acts for infringement by directors can be effectively regulated.