Author
Mr Dongjie Jin
Organisation/Institution
University of Macau
Country
MACAU (SAR OF CHINA)
Panel
Corporate Law and Governance
Title
Are Corporate Law Reforms Truly Strengthening Director Accountability in China?: An Empirical Study on Fiduciary Duty from 2005 to 2024
Abstract
Either in agency theory or stewardship theory, directors are expected to serve the company’s sole beneficiaries—all shareholders. Fiduciary duties have required that directors must uphold the duty of loyalty and duty of care to maximize shareholder value, which forms the backbone of a strong shareholder protection system. However, in China, it has been consistently criticized that the company’s regulatory institutions exist in name only. The relatively vague delineation of responsibilities in the law provides directors with more latitude to extract private interests. Company Law of the People’s Republic of China 2023 consciously distinguishes between the duties of loyalty and care, together with stipulating that directors’ unlawful gains belong to the company within limited conditions. Yet, the duty of care is harder to detect and oversight, while new corporate law does not fully respond to this issue. Unqualified directors would inflict significant harm to the company and its shareholders. Some scholars have proposed to embrace more practical and actionable rules to address such concern, such as the business judgment rule. Nevertheless, the ultimate effectiveness of these legal provisions will depend heavily on enforcement. It is questionable whether constant legal updates can genuinely regulate directors’ duties and ensure accountability. Even in the U.S. known for its proactive enforcement, directors are less likely to face litigation than one might expect. This paper will concentrate on the internal accountability between directors and shareholders and conduct an empirical analysis of case rulings on director liability lawsuits from 2005 to 2024. This observation across different periods of corporate law can to some extent assess whether clearer obligations would better support company and shareholder interests and what key variable is in such litigation. It can provide constructive guidance for future corporate law development.
Biography
I am currently pursuing a Ph.D. Programme in Law at the University of Macau. I have obtained a master’s degree (Distinction) from the University of Leeds and a bachelor’s degree from the Shanghai University of Political Science and Law. My research interests focus on corporate law, corporate governance, and the intersection of law and technology. To date, I have published two articles on corporate governance in the Business Law Review: “Crowdfunding: Is It a Double-Edged Sword on Investments?” (DOI: 10.54648/bula2024008) and “Shattering the Fetter of Main Markets on the London Stock Exchange: Is It a Benign Start for the Dual-Class Share Structure in the UK?” (DOI: 10.54648/bula2024019). My Ph.D. thesis examines the ways to reduce legal uncertainty in corporate governance arising from AI technologies. Currently, I am engaging with exploring the optimal share structure for China’s public markets.
