Comments On The Ruihe Company Prosecuting Director Zhang For Damage Compensation

At present,with the increasing development of market economy,the importance of companies is self-evident as an important organizational form.Under the development and maturity of the company,the disputes related to the company are also increasing,among which the incidents of directors damaging the company’s interests due to their violation of Duty of Care occur from time to time.Although the Duty of Care system was introduced into the revision of the “Company Law” in 2005,such cases are still difficult to be well handled.Ruihe Company Prosecuting Director Zhang for Damage Compensation is a typical case in which the director violates the Duty of Care and damages the interests of the company.The core disputes involved in the case mainly include: whether the director involved in the case is qualified as the defendant subject,the judgment standard for the director involved in the case to violate the Duty of Care,and the responsibility for the director involved in the case to violate the Duty of Care.As to whether the director involved in the case is qualified as the defendant subject,most courts judge it according to Articles 149 and 216 of the “Company Law” in judicial practice.The reason why it is controversial is that the reason is that the court’s determination on this basis can only show that the defendant meets the identity requirements,and cannot be identified as a qualified defendant.Therefore,most defendants will invoke that laws and regulations and the articles of association of the company do not stipulate their duties and defend them.Theoretically speaking,the directors’ obligations come from their relationship with the company and should be judged by substantive standards.Whether the accused has or has actually performed this duty,rather than the position.Regarding the judgment standard for the director involved in the case who violates the Duty of Care,Article 147 of the “Company Law” simply stipulates that directors have this obligation.Due to the vagueness of legislation,there is no clear stipulation of its standard like the duty of loyalty.In judicial practice,there are two ways of substantive examination and formal examination.In theory,there are subjective criteria,objective criteria and criteria combining subjective and objective.Whether the directors involved in the case violate the Duty of Care can be judged from three aspects: goodwill,due attention of people in similar positions under similar circumstances,and good ways.Regarding the responsibility of the director involved in the case for violating the Duty of Care,firstly,according to the judgment standard of Duty of Care,it is determined whether the director involved in the case violates the Duty of Care,and then it is determined whether the type of Duty of Care violated by the director involved in the case is administrative transaction obligation or commercial decision-making obligation.Because commercial decision-making involves many factors that are difficult to grasp in judicial decisions,such as commercial judgment,commercial risks,information asymmetry,etc.,while administrative affairs are daily affairs within their duties and do not involve professional knowledge in commercial aspects,which can be judged by the standards of ordinary cautious people.In this case,Director Zhang violated the Duty of Care in administrative affairs.There is no case of invoking commercial judgment rules to exempt from liability,and Director Zhang should bear all his responsibilities.