Judicial Application Of The Corporate Opportunity Doctrine

Not to usurp company opportunities is an important obligation of directors and executives to the company,and it has the function of balancing conflicts of interest between the company and managers.China’s "Company Law" in 2005 included the "prohibition against usurping company opportunities" rule,but because the legislative provisions are too rough and simple,lacking operability,its regulatory effect in practice is worth exploring.By collecting typical cases,the author has a glimpse into the current status of judicial application of the "prohibition of usurping company opportunities" rule in our country,and tries to dig and try to solve its possible problems,in order to benefit the legislative perfection and practical application of related systems.The main research object of this article is the 50 cases of usurpation of company opportunities heard by national courts from 2005 to 2019 that can be searched by various search sites.On the one hand,it includes the general characteristics of the lawsuit,the identity of the party involved,and the status of court decisions.A macro-quantitative analysis of China’s usurpation of company opportunity cases has found that the overall usurpation of company opportunity cases in China is characterized by complex controversy and difficulty in litigation.On the other hand,ruling documents that are not sufficiently detailed are excluded,and a detailed analysis of 26 typical case judgment documents is conducted,focusing on the rational analysis of the court’s determination of two issues: "definition of the subject of obligations" and "whether it constitutes usurping business opportunities." The study found that the law’s closed regulations on the scope of the subject of the obligation are seriously out of sync with the complicated and complicated reality in practice,which has brought great difficulties to the court’s determination of whether the defendant is the subject of the obligation.Regarding the determination of the core issue of the case-"Does it constitute usurping company opportunities?",There are three problems in judicial practice: First,the referee’s thinking is confused,and the "two-step" refereeing thinking has not been formed.Second,the court did not reach a consensus on the consideration factors for determining usurpation of company opportunities.The actual consideration factors include the ability to use opportunities,the willingness of the counterparty,the company’s actual efforts,job factors,and the use of company resources and business scope.Thirdly,the case of usurping the company’s opportunity is measured by the idea of civil tort,and the burden of proof is excessive.The review of judicial trial practice found that Chinese courts lack clear judgment standards and consider multiple factors to determine whether to usurp company opportunities.The ruling idea tends to draw on the model of the “principle of ownership” of the American company opportunity guidelines,and the legal tradition and trials between different legal systems The huge differences in mechanisms have caused the current judicial embarrassment.Considering the real situation in China,we strictly follow the "two-step" refereeing path to determine the attribution of business opportunities based on the determined and relatively strict "company opportunity" determination criteria,and then judge whether director executives constitute usurping company opportunities or China’s usurpable approach to usurp company opportunities.Specifically,the court should determine the scope of the subject of the obligation,especially the "senior executive" status,with substantive review criteria.As far as the identification of "company opportunities" is concerned,the two-step review from "possible participation" and "utilization of job convenience",of which the second step review only considers job identity and the use of company resources.Finally,the company’s unwillingness to take advantage of and the company’s inability to take advantage of the company’s opportunity as an obligation subject should not constitute a usurpation of the company’s opportunity in both cases.