Author: Justin Pwavra Teriwajah*
Abstract
A company is simply an abstract idea that has been personified in the eyes of the law. The legal personification of this abstract idea therefore allows a company to have the capacity for civil rights as well as the capacity for civil conduct. However, because a company is nonetheless an abstraction writ large, it must necessarily act through human agents from its incorporation to its liquidation. These human agents are entrusted with the affairs of the company and they are sometimes called the directing minds of the said company because they must think and act for the company at every stage of its life. Prior to incorporation, the promoters have to think and act for the company. The directors take over after incorporation and the liquidator or liquidation group, in turn, takes over from the directors until the winding up process is completed and the existence of this legal abstraction has been terminated. Stringent rules of the law of trust regulate instances in which one person is entrusted with the handling of another person’s property and affairs and China has evinced the desire to stringently regulate trustees when the Standing Committee of the National People’s Congress enacted the Trust Law of the People’s Republic of China in 2001. This paper argues that the legal regime under the Company Law of the People’s Republic of China for the regulation of the conduct of the directing minds of Chinese companies is quite unsatisfactory and discriminatory. The thrust of the argument by this paper is that unlike what pertains in the common law jurisdictions whereby all categories of directing minds of companies are regarded as fiduciaries to the company and are therefore required to obey equitable fiduciary duties, the various directing minds of a company in China are held to different standards of accountability. Consequently, this paper makes the case that the promoters of a company as well as members of a company’s liquidation group should be held to the same duty of care as the directors of companies in tandem with the true nature of their positions as nothing less than the directing minds of a company, but only at different stages of the company’s life cycle.
Keywords: Different Strokes, Different Folk, Duties of Care, Directing Minds of Chinese Companies
