3. SHADOW DIRECTORS
影子董事
• A person in accordance with whose directions
or instructions the directors of the company
are accustomed to act.
• (S 251 of the 2006 Act). 6.3
• Statutory creation. Can be corporate director
• Influence a governing majority and does not
have to be the life of the company.
• Judicial definition by Morrit LJ. 6.3
4. DE FACTO DIRECTORS
事实董事
• Assume the role and status of a director.
• Judicial definition: Company held him to be a
director.
• Or he himself places himself on equal footing
with other directors.
• Undertook functions of a company director
and not just management duties.
• Judicial definition and judicial test. 6.7
5. Nominee directors
代名董事
• Definition – a commercial term, may consider
the interest of his appointer and must not
conflict with the interest of the company.
• Duties of a nominee director – judicial outline
by Warren J in Re Southern Counties Fresh
Foods Ltd. 6.14
6. APPOINTMENT & RESIGNATION
任命和辞职
Responsible for the management powers and this
will be provided in the articles.
Private companies: at least one. Public: at least
two. A company must have at least one natural
person as a director.
He can resign anytime. May be a breach of
contract. He cannot appropriate the assets of the
company such as a maturing business
opportunities, property or business or
confidential information. Can compete.
7. DUTY OF CARE & SKILL AT COMMON LAW
普通法上的尽职义务
Not liable for errors of judgment.
• Not to exercise higher performance of his
duties based on his level of knowledge &
experience.
• Not bound to give continuous attention to the
affairs of the company.
• Can delegate duties to employees and officers.
• (Re City Equitable Fire Insurance Co Ltd)6.23
8. DUTY OF CARE & SKILL – STATUTORY
成文法上的尽职义务
• Objective test: the general knowledge, skill &
experience reasonably expected of a director.
• Subjective test: the general knowledge, skill
and experience that the director has.
• Executive director – reasonably expected of
him, e.g. finance director. Non executive
director is not expected to give full time to the
company.
• (S 174 of the Companies Act 2006).6.28
9. FIDUCIARY DUTIES AT COMMON LAW
普通法上的受信义务
• No conflict rule – no profit rule. First, cannot
be swayed by personal interest. Second,
accountable for any profit or gain obtained as
a result of fiduciary position. 6.36
• Duties owe to the company and not to
shareholders individually or collectively.
• Cannot enter into transactions which conflict
with the company. Best interests of the
company and cannot favour close relations.
10. FIDUCIARY DUTIES AT COMMON LAW
普通法上的受信义务
• With shareholders’ consent, he can retain
profits.
• Non disclosure of the conflict is in itself a
breach regardless of whether there is
exploitation by the director.
• Presence of good faith and in the interest of
the company.
11. STATUTORY FIDUCIARY DUTIES:
GENERAL DUTIES
成文法中的受信义务：一般义务
• Owed duty only to the company.
• Loss for breach must be company’s loss and
recovery will be for the company.
• An ex director is prohibited from exploiting for
his benefit “any property, information or
opportunity of which he became aware of at a
time when he was a director.
• S 171 to 177 of the Companies Act 2006
12. DUTY TO ACT WITHIN POWERS
仅在权限内行为的义务
• Act in accordance with the constitution.
• Exercise powers for the purposes for which
they are conferred.
• Good faith is not a defence.
• Shareholder’s remedy: derivative action to
oblige a director to observe constitution.
• S.171 of the Companies Act 2006.
13. DUTY TO PROMOTE THE SUCCESS OF
THE COMPANY
致力于公司成功的义务
• S 172 (1) of the Companies Act 2006.
• Inclusive manner. Success of the company will benefit
members. Success replaces best interests of the
company. Success means long-term shareholder’s
value.
• Due recognition to the interests of others (employees,
customers, suppliers and the community.
• High standard of business conduct.
• Act fairly between members of the company.
• S 175 (2). 6.51
14. DUTY TO AVOID CONFLICT OF INTERESTS
避免利益冲突的义务
• Direct or indirect interest that conflict or may
conflict with the interests of the company.
• A person cannot be a director of 2 companies
competing with one another.
• Exploitation of property, information or
opportunity which gives rise to conflict of
interests. Excludes those which a director has
no duty to pass to the company.
15. DUTY NOT TO ACCEPT BENEFITS FROM
THIRD PARTIES
不得从第三方获取利益的义务
• Third parties include associate companies, persons
other than the company and individuals acting for the
company.
• Benefit must be by reason of being a director
• Benefits include pecuniary and non pecuniary benefits.
Include indemnity given to a company to act as a
director of another company. There must be a conflict
of interest and not de minimis in nature. Does not
include director’s own company for providing services
to the company and the director receives
remuneration.
• S 176 (1) of the Companies Act 2006 6.62
16. DUTY TO EXERCISE INDEPENDENT
JUDGMENT (S 173(1)
独立判断的义务 (S 173(1)
• Excercise judgment in the interests of the
company and not to abdicate this duty by acting
on the instructions of third party or another
director.
• For example, the directors may have to agree to a
restructuring of the company with issuance of
shares to a designated party and allotment to be
done in a particular manner.
• Constitution can provide the need for
independent judgment for a nominee director.
17. DUTY TO EXERCISE REASONABLE CARE,
SKILL & DILIGENCE (S 174)
合理尽职及谨慎义务(S 174)
• Expected of a person carrying out the function
carried out by the director in relation to the
company. Objective test.
• The general knowledge, skill and experience that
the director has. Subjective test. For example,
the special skills of directors, an accountant, a
lawyer or CFA etc.
• Reflects common law except there is a need for
carrying on of such a duty continuously. 6.70
18. CIVIL CONSEQUENCES FOR BREACH OF
GENERAL DUTIES
违反一般义务的民事后果
• Consequences and civil liabilities: governed by
common law or equitable principles.
• Covers issues of substantive remedy (for e.g
rescission, accounting for profits etc) and
causation and foreseeability.
• Enforcement: same as for breach of fiduciary
duty.
• S 178 (1) and (2). 6.75
19. PRC Law – DEFINITIONS & DUTIES OF DIRECTORS
中国法 – 董事的定义和义务
• No inclusive definition.
• Duties to company owed by directors, supervisers
and senior managers. Duties include loyalty and
diligence.
• See art 148 of the PRC Company Law 2005.
• Duties owe to the State, employees, shareholders,
creditors and the community.
• There should be corporate social responsibility,
interests of the community or environment. Art 5
and art 17 of the PRC Company Law 2005.
20. CSRC GUIDANCE FOR LISTED COMPANIES 2006
证监会关于上市公司的指引 2006
• Due diligence in compliance with articles of
association, law and administrative regulations.
• Care, caution and diligence in ensuring company’s
business activities are in compliance with the law,
administrative regulations and other state economic
policies and its licence does not exceed its scope.
• Treat all shareholders impartially.
• Article 98. Test: Objective.
21. PRC Law: DIRECTORS’ AVOIDANCE OF
CONFLICT OF INTERESTS
中国法：董事对利益冲突的避免
• Misappropriating company’s funds.
• Using company’s funds or assets to provide guarantee or
entering into a contract in violation of the articles.
• Seeking business opportunites for himself or operating a
business in direct competition with the company.
• Keep commissions arising from transactions between the
company and others.
• Illegal disclosure of company’s secrets.
• No provision for ratification by shareholders’ meeting.
• Art 149 of the Company Law 2005.
• Art 125 does provide for decision at board of directors’
meeting and shareholders meeting but only for listed
companies.
22. CSRC GUIDANCE FOR LISTED COMPANIES 2006
证监会关于上市公司指引 2006
• Provision for avoidance of bribes or other illegal
gains or encroach on the property of the company.
• Provides for “consent of shareholders’ meeting” in
relation to business opportunities.
• Provides for any financial gain of the director to be
for account of the company plus compensation for
causing any damage to the company.
• Art 97.
23. PRC Law: CESSATION OF OFFICE
中国法：任职的终止
• No provision for liabilities after cessation of
office of directorship under Company law.
• Make references to Labour Contract law in
relation to secret profits, intellectual property
and non competition. See articles 23 and 24.
• Art 101 of the CSRC’s Guildance does make
provision for continuance of duties as
stipulated in the articles of association of
listed companies.
