Abstract:
Corporate directors’ duty to demand payment from shareholders is a specific type of duty of care, and is a part of the duty to monitor and manage the company’s financial affairs. The conduct that directors demand payment is to exercise the corporation’s rights under the contract between the corporation and its shareholders. In corporation law, the corporation shall be able to demand capital payment not only at the agreed time, but also at the time when the assets are insufficient to satisfy the claims of its creditors or the necessities of the business. Therefore, the duty of directors shall include not only timely demanding payment at the agreed time, but also paying close attention to the financial situation and business needs of corporations at all times, and timely determine whether to demand payment in advance. When a shareholder defaults, there are two paths to protect the corporation: requesting the shareholder to bear the liability for breach of contract and rescinding the capital contribution contract. The directors shall accordingly take measures such as requesting the shareholder to continue to perform, limiting the shareholder’s voting rights, and declaration of shareholder’s loss of equity. What measure to choose is a matter of business judgment. Due to the different mechanism between the shareholder’s breach of the contract and the director’s breach of its duty, the director’s liability should be judged independently, and he/she should not bear joint or supplementary liability with the subscriber. The business judgment rules limit the establishment of directors’ liability. The determination of the scope of liability should comprehensively consider causal relationship, division of directors, remuneration level and liability exemption clauses, so as to avoid making directors assume the liability of capital contribution guarantee, and avoid expulsion caused by directors’ excessive liability.