Getting Personal

A Comparative Analysis of Directors’ Liability in China and the Netherlands

in European Journal of Comparative Law and Governance
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Pursuant to article 149 Company Law of the People’s Republic of China 2013 (clc), directors will be liable for the damages of the company if their actions violate the law, administrative regulations, or the company’s statutes. According to article 152 clc, directors will also face liability towards the company’s shareholders in case of a violating action that caused direct damages to the shareholders. Unfortunately, however, these provisions and their corresponding legal obligations are general and offer no procedural guidance, nor do they elaborate on the scope and extent of the directors’ personal liability. Furthermore, it is by and large ambiguous what the directors’ responsibilities are towards the creditors of the company. This article discusses this grey area of the clc by critically comparing it with the Dutch system of directors’ liability. Upon analysis, the author proposes to introduce a standard of fault in China to determine the scope and extent of the directors’ personal liability. In addition, the author argues that China should provide the company’s creditors with a direct action against the directors for compensation of their real damages.

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References

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Kai Sunchong, ‘Lun wuguo gongsi dongshi wen ze jizhi zhi wanshan [On the Improvements of the Corporate Accountability Mechanisms of the Directors]’ Journal of Qinghai Normal University (Philosophy and Social Sciences 3 (2009) 124) Available at www.cnki.net accessed 20 August 2014 and Ting Xieya, ‘Qian yi gongsi donshi de zeren [On the Responsibility of the Company’s Directors]’ Bohai Sea Economic Outlook (2012) 6. Available at www.cnki.net accessed 20 August 2014.

10

Jingjing Liu, ‘Lun gongsi dongshi zeren de mianze jizhi [On Exemption Mechanisms for Directors’ Responsibilities]’ Journal of Hunan University of Science and Engineering 35 (2014) 4. Available at www.cnki.net accessed 20 August 2014 and Sunchong, ‘Lun wuguo gongsi dongshi wen ze jizhi zhi wanshan [On the Improvements of the Corporate Accountability Mechanisms of the Directors]’ (n 8) and Hong, Fidy Xiangxing, ‘Director Regulation in China: The Sinonization Process’ Mich. St. U. Coll. lj Int'l L. 19 (2010) 542.

12

Juan Bosu, ‘Dui wanshan woguo duli dongshi minshi zeren de sikao [Reflections on the Perfection of the Civil Liability of Independent Directors]’ Journal of Shandong Institute of Commerce and Technology 11 (2011) (6). Available at www.cnki.net accessed 20 August 2014.

23

Yvette Borrius, ‘Directors’ Liability: The Netherlands’, European Company Law 8, no. 6 (2011) 246–252. According to A.S Hartkamp & C.H. Sieburgh, Mr. C. Assers Handleiding tot de beoefening van het Nederlands burgerlijk recht. 6. Verbintenissenrecht. Deel iv. De verbintenis uit de wet (Kluwer, 2011) no. 261, the external liability of the director is a special tort liability developed in the case law of the Dutch Supreme Court. It is a derivative of the general tort liability of article 6:162 dcc.

38

Jingshu Zhang, ‘Lun dongshi dui di san ren minshi zeren zhi lilun jichu [On the Theoretical Basis of the Directors’ Liability towards the Third Party]’ Journal of Hubei University of Police 123 (2011) (6). Available at www.cnki.net accessed 20 August 2014.

41

Yang Liu, ‘Weifan qinmian yiwu zhi dongshi dui zhaiquanren de zeren chengdan [Directors’ Liability for Breaching the Duty of Diligence towards the Creditor]’ Journal of Shanxi Politics and Law Institute for Administrators 26 (2013) 3. Available at www.cnki.net accessed 20 August 2014. See also, Chen, ‘Dongshi dui gongsi zhaiquanren de zeren [The The Directors’ Responsibilities towards the Company’s Creditors] (n 35), Xieya, ‘Qian yi gongsi donshi de zeren [On the Responsibility of the Company’s Directors]’ (n 8).

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