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Unit 7. Corporate Stucture (board of directors).ppt

Unit 7. Corporate Stucture (board of directors).ppt - Unit...

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Unformatted text preview: Unit 7. Corporate Structure: Board of Directors 1. Directors 2. Fiduciary Duty of Directors in common law system 3. Fiduciary Duty of Directors in China 4. Rights of Directors 5. The board of directors 6. Special committee comprised by independent or outside directors 1. Directors 1.1 classification inside director v. outside director 内部 / 外部董事 executive director v. non-executive director 执行 / 非执行 董事 independent director v. non-independent director 独立 / 非 独立董事 1.2 number of directors Limited Liability corporation: 3-13 有限责任公司 Join stock limited corporation: 5-19 股份有限公司 1.3 tenure of directors P.R.C contract law: each term of office shall not exceed 3 years, but can be elected consecutively 1.4 the restrictions on the qualification of directors P.R. China Anyone who is under any of the following circumstances shall not take the post of a director of a company: (1) Being without or with limited capacity of civil conduct; 无民事行为能力或者限制民事行为能力; (2) He has been sentenced to any criminal penalty due to an offence of corruption, bribery, encroachment of property, misappropriation of property or disrupting the economic order of the socialist market economy and 5 years have not passed since the completion date of the execution of the penalty; or he has ever been deprived of his political rights due to any crime and 5 years have not passed since the completion date of the execution of the penalty; 因贪污、贿赂、侵占财产、挪用财产或者破坏社会 主义市场经济秩序,被判处刑罚,执行期满未逾五年, 或者因犯罪被剥夺政治权利,执行期满未逾五年; (3) Where he was a former director, factory director or manager of a company or enterprise which was bankrupt and liquidated, and was personally liable for the bankruptcy of such company or enterprise, three years have not passed since the date of completion of the bankruptcy and liquidation of the company or enterprise; 担任破产清算的公司、企业的董事或者厂长、经理 ,对该公司、企业的破产负有个人责任的,自该公司、 企业破产清算完结之日起未逾三年; (4) Where he was the legal representative of a company or enterprise, and the business license of this company or enterprise was revoked and this company or enterprise was ordered to close due to violation of the law, and he is personally liable for the revocation, three years have not passed since the date of the revocation of the business license; 担任因违法被 吊销营业执照、责令关闭的公司、企业的法定代表人, 并负有个人责任的,自该公司、企业被吊销营业执照之 日起未逾三年; (5) He has a relatively large amount of debt which is due but uncleared. 个人所负数额较大的 债务到期未清偿。 2. Fiduciary Duty of Directors in common law system fiduciary duty One who owes to another the duties of good faith, trust confidence, and candor. 信义义务最初来源于信托法。信托是为他人利益掌 管财产,并利用该财产使之升值,为了防止掌管财产 的人利用别人的财产为自己谋利,因此就对托管人施 加了信义的义务,不得将自己至于同委托人冲突的地 位。 The contents of fiduciary duty 2.1 duty of loyalty 忠实义务 The duty of loyalty requires directors to exercise their powers in the interests of the corporation and not in the directors’ own interest or in the interest of another person or organization. a. honesty and good faith b. not to place themselves in a position where their duties might conflict with their private interest 2.2 duty of care 注意义务 The directors shall meet certain standards of diligence, accountability, and propriety to serve the corporation and its shareholders properly. 2.1 Duty of loyalty 2.1.1 Scope of the duty only “directors conflicting interests transactions”are subject to the duty. ( 仅限于冲突交易的场合) 2.1.2 circumstances of conflicting interests transaction a. self-dealing (自我交易) b. executive compensation (管理人员薪酬) c. taking of corporate’s property ( 滥用公司资产) d.corporate action with mixed activities ( 动机不纯的 公司行为) Example on executive compensation In a given year, Corporation A gives compensation valued at $1 million to Peter. There is some risk that the compensation is excessive because the executive has at least a de facto ( 事实上的) influence on the corporations’ action in bargaining with himself because of the weakness in the institution of the board of directors, which formally act on behalf of the corporation in the setting of executive compensation. How to make the executive compensation not to breach the duty of loyalty? The amount of compensation must bear a reasonable relationship to the value of he services performed for the corporation. The fixing of executive compensation often involves some element of self-dealing. But it is harder for plaintiffs to successfully attack on the amount of executive compensation on the ground that it is not reasonable. In Adams v. Smith, a minority shareholder successfully challenged payments that the corporation’s board of directors ordered to be made to the widows of the deceased president. The objection was that anything from the widow, constituted an illegal waste or gift of corporate asset. Defendants, argued that the payment could be construed as an end-of-career bonus with survivor benefits. The court rejected this response because the corporation in this case had no contract to make the payments in question. Thus, the court seems to adopt that: compensation may be paid for past services, but only when the recipients’ identity and at least some of the specific arrangements for making such payments have been agreed to beforehand. Example on taking of corporate property Peter, uses the corporation’s yacht for his personal pleasure during an entire month. The use was not part of his official compensation package that was approved by the directors. The yacht has a monthly rental value of $5000, and the company might have rented it out or put it to use on the business. So Peter’s action is a short step away form an outright theft of $5000 from corporation’s treasury. Example on corporate action with mixed motives Peter causes Corporation A to pay $50 million to buy 20% of Corporation A’s own stock on the stock market because recently Corporation C tries to take over it. Corporation C announced that he was trying to acquire control of Corporation A and changed its business policies, and perhaps its management. The danger inherent in the transaction maybe Peter make Corporation A pay too much because he didn't’t want to lose his position. 2.1.3 Standards for the duty of loyalty Test 1: the directors shall act in good faith Test 2: the transaction shall be fair——fairness test The directors shall prove that the transaction is fair and reasonable, not the waste of corporate assets. The fairness test includes: a. the fairness of the transaction procedure b. the fairness of the transaction price 2.1.4 Exemption of the duty The duty of loyalty can be exempted in many countries if it satisfies at least one of the following requirements. a. disclosure plus approval by disinterested directors; b. disclosure plus shareholder approval; c. fairness 2.1.5 Corporate Opportunity Doctrine ( 公司机 会) Directors and officers may steal not only assets of their corporations (such as computer hardware and software) but also opportunities that their corporations could have exploited. Corporate law prohibits the directors to take the opportunities that belong to the corporation. 禁止篡夺公司机会 There are three questions we need to answer: (1) Whom the opportunity belongs to? the corporation or the shareholder/directors. (2) If the director uses the corporate opportunity, what kind of liability he shall bear? (3) If the corporation can not use the opportunity, whether the director can use it or not? Question 1: Whom the opportunity belongs to? —— the corporation or the shareholder ? Three criteria to decide: ( 1 ) expectancy standard —— 期待标准 the corporation has an interest or expectancy or which is essential to the corporation. ( 2 ) line of business standard —— 营业范围标准 where a corporation is engaged in a certain business, and an opportunity is presented to it embracing an activity as to which it has fundamental knowledge, practical experience and ability to pursue, it may be properly said that the opportunity is in the line of the corporation’s business. ( 3 ) fairness standard —— 公平标准 the true basis of the corporate opportunity doctrine was the “ unfairness on the particular facts” of a fiduciary taking an opportunity when the corporation’s interests call for protection. Question 2: If the director uses the corporate opportunity, what kind of liability he shall bear? The director breaks the duty of loyalty, and he shall return the benefit he has gained in the transaction or return the opportunity if the transaction is not completed yet. Sometimes courts will let the director complete the transaction, then return the benefit to corporation. Questions 3: If the corporation can not use the opportunity, whether the director can use it or not? A director or officer is free to exploit an opportunity if it has been rejected by the corporation. But he’d better: disclose the opportunity to the corporation first; then let the corporation make a resolution that the corporation agrees that he uses the opportunity; (he shall not vote for the resolution) Case ( 董事不得篡夺公司机会) Cook v. Deeks 案情:原告 cook 是多伦多建筑公司的一名小股东兼董事,被 告是该公司的另外三名大股东兼董事。多伦多建筑公司的主要 业务是长期为加拿大太平洋铁路公司承包修建铁路工程,并且 声誉卓著。 1909 年被告代表多伦多建筑公司与太平洋铁路公 司谈判承包海岸铁路支线建筑事宜,在达成协议时,被告却以 他们三人另外组建的一家公司与太平洋铁路公司签约,并且利 用他们再多伦多公司的控股地位通过一项股东决议使得多伦多 公司的一部分财产转让给被告所组建的公司,并使得多伦多公 司主动放弃这一签约机会。 cook 指控称,这项契约利益应当 属于多伦多公司,由被告操纵的股东会决议无效。 分析: 此案的两个法律问题: 1. 多伦多公司是否对现在掌握在被告三人手中签约利益享有请 求权? 2. 多伦多公司股东会决议是否有效? 分析: 1. 多伦多公司由被告控制; 2. 被告非但不保护公司利益,却利用其影响和地位排 除公司应有利益; 3. 股东会决议是大股东压迫小股东的结果。 因此,被告的行为显然违反了其应尽的义务,他 们所签署的这份契约的利益归属多伦多公司。 2.2 duty of care (1) the general standard of care Directors and officers are liable for losses to the corporation resulting from their lack of care or diligence. So directors shall discharge his duties as a director, : a. in good faith; b. with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and c. in a manner he reasonably believed to be in the best interests of the corporation. The duty of care requires that a director or officer make a reasonable investigation and honestly believe that her decision is in the best interests of the corporation. For example, the board of directors decides to purchase an existing manufacturing business for $15 million without inquiring into the value of the business or examining its past financial performance. Although the directors may believe that they made a prudent decision, they have no reasonable basis for that belief. Therefore, if the plant is worth only $5 million, the directors will be liable to the corporation for its damages, $10 million, for breaching the duty of care. (2) the differences between duty of loyalty and duty of care a. duty of loyalty is concerned about the directors’ morality; while duty of care is concerned about the professional expertise; b. duty of loyalty exerts same requirements on different directors; while duty of care exerts different requirements on different directors; c. the directors bear heavy burden of proof in the lawsuit of breaching duty of loyalty; while they bear relatively lighter burden of proof in the lawsuit of breaching duty of care. Case study Case 1 早期判例 Dorchester Finance Co. Ltd v. Stebbin 案情: 多切斯特财务公司有三名董事:斯特宾, 帕 森斯,和汉密尔顿。斯特宾是执行董事,其他两位是非 执行董事,并且很少过问公司事务。他们应斯特宾的要 求签发空白支票,而斯特宾据此发放贷款,由于贷款是 违法的,无法收回。决定该业务没开董事会。公司诉请 三董事损害赔偿。而帕森斯和汉密尔顿以自己并非执行 董事,不知情而抗辩。 判决:三位董事都必须赔偿公司损失 Foster ( 福斯特法官):两位非执行董事,分别是注 册会计师和有经验的会计师。他们说自己没有执行业 务的义务,这简直太离奇了。如果董事没有会计经验 ,另当别论,在我看来,汉密尔顿和帕森斯签发空把 支票,允许斯特宾自行其是,就是过失,他们作为该 公司董事,不仅没有展示必要的技能和注意,也根本 没有履行作为董事应尽的义务。 Case 2 Francis v. United Jersey Bank P&B 公司是一家经营再保险中介业务的公司。主要 业务是为保险商推销再保险单,从中收取佣金。行业 惯例是,中介先收取保险金,扣除佣金后支付给再保 险公司。 P&B 公司成立时,普利切德和妻子以及两 个儿子为股东,并都为董事。普利切德掌管公司事务 ,普死后,普德太太因受刺激,生病并酗酒,没有过 问公司事务,两个儿子挪用大量客户支付的再保险金。 后公司破产,债权人告公司董事普利切德太太未尽董 事责任。 初审法院:普利切德太太年事已高,时常酗酒,仅 仅为挂名董事,免除她的责任。 最高法院:判决须承担责任 理由: 1. 公司董事必须履行基本职责,应对业务有 基本了解,不得以不了解基本业务而托辞。 2. 董事 不是装饰品,不得以自己是挂名董事逃避责任。 3. 该公司具有一定规模,掌管客户大量资金,普太只 要粗略阅读财务报告,便会发现儿子的强盗行为。 2.3 remedies for breach of duty (1) Injunction or declaration 禁令 These are primarily employed where the breach is threatened but has not yet occurred. (2) Damages or compensation 损害赔偿 Compensation is against a fiduciary to compel restitution for the loss suffered by his breach of duty (3) Restoration of property 返还财产 The corporation can restore the property that the director take in the transaction 2.3 remedies for breach of duty (4) Rescission of contracts 撤销合同 The corporation can avoid the unfair contract between the corporation and the directors (5) Accounting for profits 利益归入公司 If the transaction is between the director and third party and it has been concluded, the profit shall be given to the corporation 3. The fiduciary duty of directors in China 3.1 general regulation The directors shall bear the obligations of fidelity and dilig ence to the company. ( 忠实和勤勉义务) 3.2 specific regulation a. they may not take any bribe or other illegal gains by ta king the advantage of his authorities, or encroach on the prop erties of the company. 他们不得利用职权收受贿赂或者其 他非法收入,不得侵占公司的财产。 b. may not misappropriating funds of the company; 不得 挪用公司资金。 c. may not deposit the company's funds into an account in his own name or in any other individual's name; 将公司资金 以其个人名义或者以其他个人名义开立账户存储 d. without the consent of the shareholders' meeting, shareholders’ assembly or board of directors, they may not loan the company’s fund to others or providing any guaranty to any other person by using the company‘s property as in violation of the articles of association; 违反公司章程 的规定,未经股东会、股东大会或者董事会同意,不得将 公司资金借贷给他人或者以公司财产为他人提供担保 . e. they may not sign a contract or trading with this company by violating the articles of association or without the consent of the shareholders‘ meeting or shareholders’ assembly; 不得违反公司章程的规定 或者未经股东会、股东大会同意,与本公司订立合同或者 进行交易。 f. without the consent of the shareholders' meeting or shareholders‘ assembly, they may not seek business opportunities for himself or any other person by taking advantages of his authorities, or operating for himself or for any other person any like business of the company he works for; 未经股东会或者股东大会同意 ,不得利用职务便利为自己或者他人谋取属于公司的商业机会 ,自营或者为他人经营与所任职公司同类的业务 g. they may not take commissions on the transactions between others and this company into his own pocket; 不得接受他人与公司交易的佣金归为己有 h. they may not disclose the company‘s secrets without permit; 不得擅自披露公司秘密 i.they cannot engage in o ther acts that are inconsistent with the obligation of fidelity to the company. 不得做违 反对公司忠实义务的其他行为 Case 1 :公司经理自我交易 王某为甲公司经理, 95 年他个人发明一项专利,并同 意将其转让给甲公司使用。甲公司股东会同意从王某 购买专利使用权,并由公司副经理朱某与王某的妻子 签订了合同。甲公司使用专利技术后,效益很好,并 按承诺给王某提成。甲公司的上级单位得知后,认为 王某将自己的专利技术卖给本公司,构成自我交易, 要其将收入退回给公司,王某不同意,被诉到法院。 Questions: 1. 王某行为是否构成关联交易? 2. 王某应否退回所得收入? Case 2 某研究院有一个实验楼的施工项目,拟向社会公开 招标。有五家建筑公司参与投标,其中宇航公司和 鹏程公司最有实力。鹏程公司为获得项目,用重金 买通宇航公司的董事王某,王某将宇航的报价告知 鹏程。鹏程遂得以低于宇航的报价获得工程项目。 后鹏程公司偷工减料,实验楼建成后 1 年便出现质 量问题。有关部门追查质量问题时,发现了鹏程公 司贿赂宇航公司的行为。 4. Right of Directors 4.1 Directors’ right to information Directors have a right to inspect corporate books and records. In most jurisdictions, the right of a director to inspect is deemed absolute. 4.2 Right to compensation If a shareholder did challenge director compensation, the directors would have the burden to prove the reasonableness of the amount paid. 4.3 Right to sue on behalf of the corporation Directors and officers have the right to bring an action on the corporation’s behalf. Such a right is usually free of many of the procedural restrictions that hamper derivative actions brought by shareholders. 5. The board of directors 5.1 rights of board of directors (1) convening shareholders' meetings and reporting the status on work thereto; (2) carrying out the resolutions made at the shareholders' meetings; (3) determining the operation plans and investment plans; (4) working out the company's annual financial budget plans and final account plans; (5) working out the company's profit distribution plans and loss recovery plans; (6) working out the company's plans on the increase or decrease of registered capital, as well as on the issuance of corporate bonds; (7) working out the company's plans on merger, split-up, change of the company form, dissolution, and etc.; (8) making decisions on the establishment of the company's internal management departments; (9) making decisions on hiring or dismissing the company's manager, deciding on the hiring or dismissing of vice manager(s) and the person in charge of finance; (10) working out the company's basic management system; and (11) other functions as prescribed in the articles of association. 董事会对股东会负责,行使下列职权: (1) 召集股东会会议,并向股东会报告工作; (2) 执行股东会的决议; (3) 决定公司的经营计划和投资方案; (4) 制订公司的年度财务预算方案、决算方案; (5) 制订公司的利润分配方案和弥补亏损方案; (6) 制订公司增加或者减少注册资本以及发行公司债券的 方案; (7) 制订公司合并、分立、变更公司形式、解散的方案; (8) 决定公司内部管理机构的设置; (9) 决定聘任或者解聘公司经理及其报酬事项,并根据经 理的提名决定聘任或者解聘公司副经理、财务负责人及其 报酬事项; (10) 制定公司的基本管理制度; (11) 公司章程规定的其他职权。 5.2 meeting of board of directors The meeting of the board of directors shall be convened and presided over by the chairman of the board of directors. If the chairman of the board of directors is unable or does not perform his duties, the meeting may be convened or presided over by the deputy chairman of the board of directors. If the deputy chairman of the board of directors is unable or does not perform his duties, the meeting may be convened or presided over by a director jointly recommended by half or more of the directors. (董事会由董事长 主持或召集,董事长无法召集,由副董事长可召集或主持;如 果副董事也无法召集,由过半数以上董事选出的董事召集。) 6. Special committee comprised by independent or outside directors In the United States, most publicly held corporations have committees of the board of directors. (1) nominating committee choose management’s slate of directors that is to be submitted to shareholders t the annual election of directors. Nominating committees also often plan generally for management succession. Nominating committees wholly or largely comprise outside directors. 提名委员会 (2) compensation committee review and approve the salaries, bonuses, stock options, and other benefits of high-level corporate executives 薪酬委员会 (3) auditing committee recommend independent public accountants and supervise the public accountants’ audit of the corporate financial records. 审计委员会 ...
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