Trends and development of the directors' duty of loyalty in China: a case analysis

Wen, S. and Zhao, J. ORCID: 0000-0001-6430-2356, 2021. Trends and development of the directors' duty of loyalty in China: a case analysis. Sustainability, 13 (15): 8589. ISSN 2071-1050

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Covering a central theme in corporate law development, this paper discusses the pragmatic utility of the common-law-originated duty of loyalty of company directors in the civil law context of China. The reception of legal transplantation in a host environment remains a contentious theme, and it seems to be an opportune time to study relevant cases that have been adjudicated since China’s statutory inauguration of the directors' duty of loyalty in 2005, in the sense that more than 10 years of practice has resulted in ample evidence on the practical effects of this transplanted duty. Through an analysis of 526 cases on the basis of eight attributes, we discovered some commendable features, including increasing accessibility of the law and a differentiation of various types of directors’ duties of loyalty. Meanwhile, the selective adoption norm customary to Chinese culture has to a certain extent compromised the intended goals of greater legislative clarity, judicial consistency and in turn balanced and sustainable businesses, demonstrated in several incompatibilities between transplanted duties and domestic legal institutions. Reshaping the conventional transplantation ideal that commercial laws are easily transferable, the paper suggests the construction of a broad collateral regime for greater congruence between laws and existing institutions.

Item Type: Journal article
Publication Title: Sustainability
Creators: Wen, S. and Zhao, J.
Publisher: MDPI AG
Date: 1 August 2021
Volume: 13
Number: 15
ISSN: 2071-1050
Rights: Copyright: © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://
Divisions: Schools > Nottingham Law School
Record created by: Linda Sullivan
Date Added: 06 Aug 2021 15:44
Last Modified: 06 Aug 2021 15:44

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