On The Perfection Of The System Of Director’s Non-Cause Dismissal In China

A company is a social organization body established by shareholders based on common will,and a company is characterized by an independent legal personality.Under the trend of rapid economic development in China,the improvement and development of the company system have become more and more important in the economic and social development of China.On April 28,2019,China issued the"Provisions on Several Issues Concerning the Application of the Company Law of the People’s Republic of China(V)",which stipulates in Article 3: "If a director is effectively resolved by the shareholders’ meeting or the shareholders’ meeting before the expiration of his term of office The People’s Court shall not support the dismissal of a director whose claim that the dismissal does not have legal effect.If a director is dismissed from office and files a lawsuit with the company for compensation,the people’s court shall determine whether the compensation and the reasonable amount of compensation shall be determined following the laws,administrative regulations,the provisions of the articles of association,or the agreement of the contract,taking into account the reasons for the dismissal,the remaining term of office,the director’s remuneration and other factors.Since then,the system of dismissal of directors without cause has been established in China.This provision introduced by the Company Law has its advantages and disadvantages.Its advantages are: the company is the embodiment of private law autonomy,the soul of the company lies in the autonomy of shareholders.Company autonomy and the principle of autonomy of civil and commercial law coincide.In other words,the company is an independent enterprise legal person,the company has the autonomy of operation and rely on shareholders to jointly develop a charter and following the scope of the charter to carry out a series of corporate activities of autonomy,so the court should not intervene too much in the company’s internal autonomy,which is also to protect the company’s autonomy,to avoid the destruction of its independent legal personality.On the other hand,this provision of the Company Law also has its drawbacks.First,the company law does not have a clear legal characterization of the directors’ dismissal without cause,which is likely to cause problems in judicial practice.Secondly,the Company Law does not specify the legal characterization of directors’ termination compensation and the limit of reasonable compensation for directors’ termination,which also results in the lack of uniform compensation standard for directors’ termination by shareholders’ meeting in practice,and leaves it entirely up to shareholders’ meeting to decide whether to compensate and how to compensate.In practice,there are many opposing views on the legal characterization of directors’ termination compensation,whether to obtain workers’ termination compensation according to labor law or to set directors’ compensation according to the company’s articles of incorporation,or whether both directors’ compensation and workers’ compensation can be claimed.To this end,this paper argues that a system related to the removal of directors in China should be established and improved.This paper is divided into four parts as follows.The first part is to analyze the concept and theoretical basis of the director’s dismissal system in China.This part briefly introduces the legal characterization of the director’s dismissal system without cause and the current situation and characteristics of the director’s dismissal system in China and foreign countries without cause.The second part is a brief empirical analysis of the cases of directors’ dismissal without cause in China’s practice,and an interpretation of the important decisions.Matters such as court hierarchy and causes of action of relevant cases are discussed,aiming to lay the foundation for the following suggestions for improvement by analyzing the problems existing in the practice of directors’ dismissal.Again,the paper analyzes the problems in the practice of the system of dismissal without cause in China.For example,the arbitrary removal of lawful directors by shareholders’ meetings damages the long-term interests of the company,the lack of substantive and procedural conditions for the removal of directors by shareholders’ meetings,the unclear limits of judicial power to intervene in shareholders’ meeting resolutions,and the lack of necessary remedies for directors’ rights.The fourth chapter of this paper is a suggestion to improve the existing system of directors’ dismissal without cause,which is the key chapter of this paper.The first part of this section is to suggest the improvement of the legislation related to the removal of directors by shareholders’ meeting,such as the improvement of the solution of the conflict between the articles of association and legislative provisions and the establishment of the internal and external evaluation system for the supervision of directors’ performance,etc.The next section is to establish a remedial system related to the removal of directors,such as the protection of the right to claim compensation for the dismissed directors and the establishment of a relevant supervisory body and a complaint body for directors’ rights and interests.By corresponding to the problems pointed out in the previous paper,some suggestions are made for the problems therein.Finally,this paper concludes this paper based on the main ideas of each chapter: China should improve the legislation related to company law and establish the relevant remedial system for the removal of directors.