Research On The Duty Of Care Based On The Parent Company Directors To Its Subsidiaries

With the prosperity and development of social economy,the number of group enterprises is seeing an upward tendency with various scales,during which the parent company should all exercise the control right inevitably.In order to deal with the legal problems faced by hierarchical companies,most scholars have conducted studies from the perspective of the control rights of the parent company,and focused on the rights and interests protection of the subsidiaries and their shareholders.In reality,there is another problem,that is,the group is of low governance ability,with the parent company not exercising control and influence at all,which leads to the damage of the operation of the subsidiary and subsequent infringement of the rights and interests of the shareholders of the parent company.Based on the increasing number of group enterprises,this paper analyzes the current legislation and judicial practice to reveal the legal dilemma faced by the parent company and the lack of protection for the parent company’s shareholders.In view of this problem,this paper has the following core viewpoints: The Company Law should correctly understand the legal relationship between the parent company and subsidiary company,and admit the control and management relationship within the hierarchical company and the lacking of remedy way,instead of neglecting the "visible hand" that controls the subsidiary company.On the basis of recognizing the necessity of the parent company’s directors’ management of the subsidiary,the corresponding obligations shall be set for the authority of the management control.By referring to the theoretical research and practical exploration experience of Germany and Japan on this issue,construct the obligatory mechanism of duty of care of parent company directors to its subsidiaries in China’s Company Law,so as to explore a new path of governance mechanism in group companies.Based on the above ideas,this paper is mainly divided into five parts: In the introduction,the exercise of group control right is discussed directly,so as to draw out the problems discussed and the research object of this paper,and literature review of domestic and foreign studies is conducted as the research foundations.The second part takes the incident of Shineway Group’s involvement with its subsidiary as the breakthrough point to draw out the legal dilemma faced by group enterprises in the traditional Company Law.Then,it introduces the current situation of legislation and judicial practice in China,and puts forward the new idea of letting the parent company directors take duty of care to its subsidiaries.Finally,it compares the system of this issue with the dual shareholder representative action which has similar value,and analyzes the relationship between the two systems.The third part introduces the necessity,rationality and theory discussion of the parent company’s directors’ obligation of good management to its subsidiaries,which provides a theoretical basis for the construction of the system.The fourth part introduces and compares the system of parent company directors’ obligation of good management to subsidiaries in German and Japanese company laws from three aspects of legislative system,theoretical discussion and practical cases,in order to explore the path suitable for system construction in China.On the basis of the above discussion,the fifth part puts forward some suggestions on the establishment of a good management obligation system undertaken by the directors of the parent company to its subsidiaries,and elaborates in detail from four aspects,namely,the object of obligation,the degree of obligation,the scope of obligation and the improvement of supporting legal mechanism.The paper is innovative in the following aspects: in view of the current problems of group governance,this paper studies the new ideas of recognizing the control rights of the parent company directors and imposing corresponding obligations;to study and learn from the German and Japanese company law to deal with the theory and practice of such problems;to put forward some suggestions on perfecting our company law from the point of view of perfecting group law regulation.