In management buyouts and controlling shareholder buyouts, the position of the directors is sensitive. Not only because they are at the core of the very transaction, but most importantly because of the probable concer...In management buyouts and controlling shareholder buyouts, the position of the directors is sensitive. Not only because they are at the core of the very transaction, but most importantly because of the probable concern that they stand on both sides of deal, hence violating their duty of loyalty to the company as a whole. In the same time, both Delaware and Chinese jurisprudence provide that directors are trusted with a position to use their discretion to do the best for the company. Hence, the standard to review whether such fiduciary duty is breached is the fundamental question one must solve before seeking any judicial intervention or damages. In this matter, Delaware law and Chinese law have quite different standards. Delaware law has a hierarchy of standards from business judgment rule, to enhanced scrutiny, to entire fairness, corresponding with the possibility of directors standing on both sides of the deal. In China, the standard is the appear-to-be much harsher strict liability, while in practice the enforcement does not provide enough support.展开更多
文摘In management buyouts and controlling shareholder buyouts, the position of the directors is sensitive. Not only because they are at the core of the very transaction, but most importantly because of the probable concern that they stand on both sides of deal, hence violating their duty of loyalty to the company as a whole. In the same time, both Delaware and Chinese jurisprudence provide that directors are trusted with a position to use their discretion to do the best for the company. Hence, the standard to review whether such fiduciary duty is breached is the fundamental question one must solve before seeking any judicial intervention or damages. In this matter, Delaware law and Chinese law have quite different standards. Delaware law has a hierarchy of standards from business judgment rule, to enhanced scrutiny, to entire fairness, corresponding with the possibility of directors standing on both sides of the deal. In China, the standard is the appear-to-be much harsher strict liability, while in practice the enforcement does not provide enough support.
