Corporate Governance and Criminal Responsibilities
China's rapid economic growth in recent years has been accompanied by an increasing demand for effective corporate governance, which has become an important aspect of the country's economic development. Corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It includes the relationships among the company's management, board of directors, shareholders, and other stakeholders. Effective corporate governance is essential for maintaining the trust and confidence of investors and other stakeholders, and for ensuring the long-term success of the company.
One of the most important aspects of corporate governance in China is the criminal responsibilities of the board of directors, general manager, and legal representative. These individuals play a critical role in the governance of the company and are responsible for ensuring that the company operates in compliance with the law and with ethical and responsible business practices, as they can be held criminally liable in case of various illegal activities. The Chinese Company Law clearly defines the duties and criminal consequences of the board of directors, general manager and legal representative as follow:
Chinese Law Article 147, 2018:
The directors, supervisors and senior officers of a company shall comply with laws, administrative regulations, and the articles of association and shall owe duties of fidelity and due diligence to the company.
No director, supervisor or senior officer may take any bribe or other illegal gain by taking advantage of his position or misappropriate company assets for personal use.
Chinese Law of the People’s Republic of China, Article 148, 2018:
No director or senior officer may:
misappropriate company funds;
divert company funds into an account held in his own name or in the name of any other individual; loan company funds or provide any guaranty to any other person by using company property in violation of the articles of association without first obtaining the consent of the shareholders'meeting, the general meeting of shareholders or the board of directors;
become a party to any contract or business dealings with the company in violation of the articles of association without first obtaining the consent of the shareholders'meeting or the general meeting of shareholders;
seek business opportunities for himself or for any other person by taking advantage of his position, or operate on his own behalf or on behalf of any other person any business similar in nature to that of the company, without first obtaining the consent of the shareholders'meeting or the general meeting of shareholders;
personally accept any commission on any transaction to which the company is a party; unlawfully disclose confidential company information; oract in any way that is inconsistent with his duty of fidelity to the company.
Any income received by any director or senior officer in violation of this Article shall be treated as the property of the company.
Chinese Law of the People’s Republic of China, Article 149, 2018:
Where any director, supervisor or senior officer violates any law, administrative regulation, or the articles of association in the course of performing his duties, he shall be liable to compensate the company for any loss thereby caused to the company.
Chinese Law of the People’s Republic of China, Article 152, 2018:
Where any director or senior officer damages the shareholders' interests by violating any law, administrative regulation, or the articles of association, the shareholders may initiate a legal action in the people's court.
China has made significant progress in strengthening its laws and regulations related to corporate governance and criminal responsibilities, and is willing to add stricter and stricter requirements and increased penalties for illegal activities. continues to work towards ensuring that companies operate in a transparent and responsible manner.
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