As is well known, in recent years, "compliance" has become a hot topic that frequently appears in the public eye and has become a major trend in the development of enterprise management. Therefore, we plan to mainly start from the perspective of improving business management, select three common high-risk areas in enterprise operations: inter enterprise lending, contract control, and the performance of directors, supervisors, and senior executives, and launch three articles to sort out relevant compliance management points. This article will mainly focus on the performance of directors, supervisors, and senior executives. According to the Company Law of the People's Republic of China (2018 Amendment, hereinafter referred to as the "Company Law") and other relevant laws, as well as the provisions of the company's articles of association and other systems, directors, supervisors, and senior management personnel have certain rights of decision-making, supervision, and management in the operation of the enterprise.

As is well known, in recent years, "compliance" has become a hot topic that frequently appears in the public eye and has become a major trend in the development of enterprise management. Therefore, we plan to mainly start from the perspective of improving business management, select three common high-risk areas in enterprise operations: inter enterprise lending, contract control, and the performance of directors, supervisors, and senior executives, and launch three articles to sort out relevant compliance management points. This article will mainly focus on the performance of directors, supervisors, and senior executives.

According to the Company Law of the People's Republic of China (2018 Amendment, hereinafter referred to as the "Company Law") and other relevant laws, as well as the provisions of the company's articles of association and other systems, directors, supervisors, and senior management personnel have certain rights of decision-making, supervision, and management in the operation of the enterprise. They are the core figures of the enterprise's operation, and their performance of duties is also a key compliance management area in the enterprise's operation. The specific points of compliance management are summarized as follows:

（1） Qualification of the directors, supervisors, and senior executives According to Article 146 of the Company Law, a person shall not serve as a director, supervisor, or senior manager of a company under any of the following circumstances: 1.No capacity for civil conduct or with limited capacity for civil conduct.2. If a person is sentenced to criminal punishment for corruption, bribery, embezzlement of property, misappropriation of property, or disrupting the order of the socialist market economy , and the execution period has not exceeded five years, or if a person is deprived of political rights due to a crime, the execution period has not exceeded five years.

3. Where a director or factory director, or manager of a company or enterprise that is in bankruptcy liquidation is personally responsible for the bankruptcy of the company or enterprise, less than three years have passed since the completion of the bankruptcy liquidation of the company or enterprise.4. Those who serves as the legal representative of a company or enterprise whose business license has been revoked or ordered to close due to illegal activities, and who bear personal responsibility, it has not been more than three years since the date of revocation of the business license of the company or enterprise. 5. Individuals have a significant amount of debt that has not been repaid upon maturity. Where a company elects, appoints directors or supervisors, or hires senior management personnel in violation of the provisions of the preceding paragraph, the election, appointment, or appointment shall be invalid. If any director, supervisor, or senior management personnel encounter the aforementioned situations during their tenure, the company shall dismiss them from their positions.

At the same time, in accordance with the provisions of Articles 44, 59 and 107 of the "Civil Servant Law of the People's Republic of China" (revised in 2018), The Opinions of the Ministry of Education and the Ministry of Supervision on Strengthening the Construction of Anti-corruption in Colleges and Universities stipulates that for civil servants and members of the party and government leadership team of colleges and universities, who serve as a director, supervisor, or senior manager in an enterprise, there are generally restrictions on part-time and tenure, as follows:

1. Civil servants shall abide by laws and regulations, and shall not engage in or participate in profit-making activities in violation of relevant regulations. They shall also not concurrently hold positions in enterprises or other profit-making organizations;2. Where a civil servant resigns from public office or retires, within three years of resignation for civil servants who were the former leading member or civil servant holding a leadership position at or above the county level, and for other civil servants within two years of resignation, shall not be employed by any enterprise or other profit-making organization directly related to their original work business, and shall not engage in profit-making activities directly related to their original work business.

3. Members of the Party and government leadership team in higher education institutions should concentrate on doing their job well. Except for those who hold part-time positions in approved university asset management companies due to work needs, they are not allowed to hold part-time positions in other economic entities within or outside the school.

In addition, it should be noted that for special entities such as listed companies and financial institutions, the qualifications and qualifications of their directors, supervisors, and senior management personnel are subject to special restrictions and requirements. Relevant entities should comply with the special compliance management requirements of their regulatory authorities and industries.  

（2） the directors, supervisors, and senior executives's Duty of Loyalty

According to Article 180 of the Company Law of the People's Republic of China (Revised Draft) (hereinafter referred to as the "Company Law Draft") reviewed at the 32nd meeting of the 13th National People's Congress Standing Committee, the duty of loyalty of directors, supervisors, and senior management personnel is clearly defined as "shall not use their power to seek illegitimate benefits".In accordance with Articles 21, 147 and 148 of the Company Law, and Article 14 of the Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the Company Law of the People's Republic of China (III) (revised in 2020, hereinafter referred to as the Interpretation III of the Company Law), According to the provisions of Article 1 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (V) (revised in 2020, hereinafter referred to as the "Interpretation V of the Company Law"), directors, supervisors and senior managers have the duty of loyalty to the company and shall not commit any of the following acts:

1. Misappropriating company funds.2. Open an account to deposit company funds in their personal name or in the name of another individual. 3. Violating the provisions of the company's articles of association by lending company funds to others or providing guarantees for others with company assets without the consent of the shareholders' meeting, shareholders' meeting, or board of directors. 4. Violate the provisions of the company's articles of association or enter into contracts or transactions with the company without the consent of the shareholders' meeting or general meeting.

5. Without the consent of the shareholders' meeting or the shareholders' general meeting, taking advantage of one's position to seek business opportunities belonging to the company for oneself or others, and operating similar businesses for oneself or others.

6. Accept commissions for transactions between others and the company as their own. 7. Unauthorized disclosure of company secrets.

8. Assist shareholders in withdrawing their capital contributions [1].

9. Using its affiliated relationship [2] to harm the company's interests [3].

It should be noted that the Company Law only specifies that the income obtained by directors and senior management personnel who violate their duty of loyalty should belong to the company, without specifying the supervisors. There is also no consensus in judicial practice in various regions, but the Draft Company Law clearly includes supervisors as the subject of the obligation to be classified.  

（3） Diligent Obligations of the directors, supervisors, and senior executives According to Article 180 of the Draft Company Law, the duty of diligence of directors, supervisors, and senior management personnel is clearly defined as "performing duties should exercise the reasonable care and should exercise for the best interests of the company".

In accordance with Article 112 of the Company Law, Article 18, Article 19 and Article 20 of the Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the Company Law of the People's Republic of China (II) (revised in 2020, hereinafter referred to as the Company Law Interpretation II), Article 13 and Article 27 of the Company Law Interpretation III, According to Article 12 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (IV) (revised in 2020, hereinafter referred to as the "Interpretation IV of the Company Law"), directors, supervisors and senior managers have the duty of diligence to the company, and should pay attention to the following compliance points when performing their duties:

1. If a shareholder fails to fulfill or fully fulfill their capital contribution obligations during the company's capital increase, and the company, other shareholders, or creditors request that the directors or senior management personnel who have not fully paid their capital contributions bear corresponding responsibilities due to the failure to fulfill their loyalty and diligence obligations, the people's court shall support them.

2. The directors and senior management of the company fail to fulfill their duties in accordance with the law, resulting in the limited liability company failing to produce or preserve the company's articles of association, shareholders' meeting minutes, board of directors meeting resolutions, supervisory board meeting resolutions, financial accounting reports, and company accounting books in accordance with the law, and the limited liability company failing to produce or preserve the company's articles of association, shareholder register, corporate bond stubs, shareholders' meeting minutes, board of directors meeting resolutions, and supervisory board meeting resolutions in accordance with the law If financial accounting reports cause losses to shareholders and shareholders request that the company's directors and senior management personnel who bear corresponding responsibilities bear civil compensation liability in accordance with the law, the people's court shall support them in accordance with the law.3. After the equity transfer has not been registered with the company registration authority, the original shareholder transfers, pledges, or otherwise disposes of the equity still registered in their name, resulting in losses to the transferee shareholder, and the transferee shareholder requests the original shareholder to bear compensation liability, and the directors or senior management personnel who are at fault for not handling the change registration in a timely manner shall bear corresponding responsibilities, the people's court shall support [6].

For a joint-stock company, if the resolution of the board of directors violates laws, administrative regulations, the company's articles of association, or the resolutions of the shareholders' meeting, causing serious losses to the company, the directors participating in the resolution shall be liable for compensation to the company. However, if it is proven that objections were expressed during the voting and recorded in the meeting minutes, the director may be exempted from liability. 5. If the directors of a joint stock company fail to establish a liquidation team within the statutory time limit [7] to commence liquidation, resulting in the depreciation, loss, damage or loss of the company's assets, and creditors claim that they are liable for compensation for the company's debts within the scope of the losses caused, the people's court shall support it in accordance with the law.6. If a director of a joint-stock company fails to fulfill his obligations, resulting in the loss of the company's main assets, account books, important documents, etc., and is unable to carry out liquidation, and the creditor claims that he shall bear joint and several liability for the company's debts, the people's court shall support it in accordance with the law.

7. If a director of a joint-stock company maliciously disposes of the company's assets after the dissolution of the company, causing losses to creditors, or fraudulently obtains the company registration authority to cancel the registration of a legal person through false liquidation reports without legal liquidation, and creditors claim that they bear corresponding compensation responsibilities for the company's debts, the people's court shall support it in accordance with the law.

8. When a company is dissolved, it shall apply for deregistration after completing the liquidation in accordance with the law. If a company undergoes deregistration without liquidation, resulting in the inability of the company to proceed with liquidation, and creditors claim that the directors of the joint-stock company are responsible for paying off the company's debts, the people's court shall support it in accordance with the law.

In addition, it should be noted that for directors, supervisors, and senior management personnel of listed companies, in addition to the obligations of loyalty and diligence mentioned above, they also have a higher requirement for information disclosure. The directors, supervisors, and senior management of listed companies shall strictly comply with the information disclosure rules of relevant regulatory authorities and exchanges, and fulfill corresponding information disclosure compliance management obligations.Typical case [11]: When a company is established, directors and senior management have the obligation to call on shareholders to make capital contributions Shenzhen Simante Company was established on January 11, 2005, with a subscribed registered capital of 16 million US dollars. According to its articles of association, shareholders are required to make a capital contribution of $3 million within 90 days after the establishment of the company. Within one year after the first capital contribution, shareholders are required to make a capital contribution of $13 million. Despite multiple actual contributions, the company still owes their capital contributions. In 2013, the company entered bankruptcy liquidation proceedings, and the administrator sued six directors on behalf of the company. They believed that the six directors had failed to fulfill their payment obligations after the expiration of the capital contribution period, and demanded that they bear compensation responsibility for the unpaid capital contribution to the company.

The Supreme People's Court holds that: The focus of the dispute in this case is whether six directors, including Hu Qiusheng, should bear compensation responsibility for the capital contributions owed by the shareholders of Shenzhen Simante Company.

According to Article 147 (1) of the Company Law of the People's Republic of China, directors, supervisors, and senior management personnel shall comply with laws, administrative regulations, and the company's articles of association, and shall have the obligation of loyalty and diligence towards the company. The above provisions do not specify the specific circumstances of directors' diligent obligations, but directors have the obligation to call on shareholders who have not fulfilled or fully fulfilled their capital contribution obligations, which is determined by the functional positioning of directors and the important role of company capital. According to the functional positioning of the board of directors, the board of directors is responsible for the company's business operations and affairs management. The board of directors is composed of directors, who are the business executives and affairs managers of the company. The full performance of shareholders' capital contributions is the foundation for the normal operation of a company, and the supervision of shareholders' capital contributions by directors is necessary to ensure the normal operation of the company.

Article 13 (4) of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III) If a shareholder fails to fulfill or fails to fully fulfill their capital contribution obligations during the company's capital increase, and the plaintiff brings a lawsuit in accordance with the first or second paragraph of this article, and requests that the director or senior management who fails to fulfill their obligations as stipulated in the first paragraph of Article 147 of the Company Law bear corresponding responsibilities for the unpaid capital contribution, the people's court shall support it. After the director or senior management assumes responsibility, they may pursue compensation from the defendant shareholder The purpose of the above regulations is to endow directors and senior management with the obligation to supervise and urge shareholders to increase their capital, in order to ensure that shareholders fully fulfill their investment obligations and ensure the enrichment of the company's capital. Under the company's registered capital subscription system, shareholders who subscribe to capital contributions during the establishment of the company have the same obligation to contribute capital as when the company increases capital, and the obligations of directors and senior management to supervise and urge shareholders to contribute capital should not be different. According to Article 13 (4) of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of the Company Law of the People's Republic of China (III), under the company's registered capital subscription system, if shareholders fail to fulfill or fully fulfill their investment obligations, directors and senior management personnel have the obligation to call on shareholders to make capital contributions. According to Article 149 of the Company Law of the People's Republic of China, if a director, supervisor, or senior management violates laws, administrative regulations, or the company's articles of association while performing their duties and causes losses to the company, they shall be liable for compensation.

reference material

[1] Article 14 of the Company Law states that if a shareholder withdraws their capital contribution, the company or other shareholders request that they return the principal and interest of the capital contribution to the company, and other shareholders, directors, senior management personnel, or actual controllers who assist in withdrawing their capital contribution shall bear joint and several liability for this, the people's court shall support it.

If the company's creditors request that the shareholders who withdraw their capital contributions bear supplementary compensation liability for the portion of the company's debts that cannot be repaid within the scope of withdrawing capital interest, and other shareholders, directors, senior management personnel, or actual controllers who assist in withdrawing their capital contributions bear joint and several liability for this, the people's court shall support it; The shareholders who have withdrawn their capital contributions have already assumed the above-mentioned responsibilities, and if other creditors make the same request, the people's court will not support it.[2] Article 21 of the Company Law: The controlling shareholders, actual controllers, directors, supervisors, and senior management of a company shall not use their affiliated relationships to harm the interests of the company.

Those who violate the provisions of the preceding paragraph and cause losses to the company shall be liable for compensation. [3] In accordance with Article 84 of the Civil Code and Article 21 of the Company Law, the plaintiff company requested the controlling shareholders, actual controllers, directors, supervisors, and senior managers to compensate for the losses caused by connected transactions that damaged the interests of the company. The defendant only claimed that the transaction had performed information disclosure, and had been approved by the shareholders' meeting or the shareholders' meeting The people's court shall not support the defense based on the procedures stipulated in administrative regulations or company articles of association.

If the company has not filed a lawsuit, shareholders who meet the conditions specified in Article 151 (1) of the Company Law may file a lawsuit with the people's court in accordance with Article 151 (2) and (3) of the Company Law.

[4] Article 13 of Interpretation 3 of the Company Law: If a shareholder fails to perform or fully perform his/her obligation of capital contribution, and the company or other shareholders request him/her to fully perform his/her obligation of capital contribution to the company according to law, the people's court shall support him/her.

If creditors of the company request shareholders who have not fulfilled or fully fulfilled their investment obligations to bear supplementary compensation liability for the part of the company's debts that cannot be repaid within the scope of the unpaid principal and interest, the people's court shall support it; Shareholders who have not fulfilled or fully fulfilled their capital contribution obligations have already assumed the above-mentioned responsibilities, and if other creditors make the same request, the people's court shall not support it. If a shareholder fails to fulfill or fully fulfill their investment obligations when the company is established, and a plaintiff brings a lawsuit in accordance with the first or second paragraph of this article, requesting that the initiators of the company and the defendant shareholders bear joint and several liability, the people's court shall support it; After the initiators of the company assume responsibility, they may seek compensation from the defendant shareholders.

If a shareholder fails to fulfill or fails to fully fulfill their capital contribution obligations when increasing the company's capital, and the plaintiff brings a lawsuit in accordance with the first or second paragraphs of this article, requests that the director or senior management who fails to fulfill their obligations under the first paragraph of Article 147 of the Company Law bear corresponding responsibilities due to the failure to fully pay their capital contributions, the people's court shall support it; After assuming responsibility, directors and senior management personnel may seek compensation from the defendant shareholders.

[5] Article 12 of the Forth Interpretation of the Company Law ,the company's directors, senior managers, etc. failed to perform their duties according to law, resulting in the company's failure to produce or preserve company documents and materials stipulated in Articles 33 and 97 of the Company Law , causing losses to the shareholders, and the shareholders request the directors and senior management personnel of the company who are responsible for the civil compensation according to the law, the people's court shall support it.[6] Article 27 of the Third Interpretation of the Company Law, after the transfer of stock rights, no change registration has been handled with the company registration authority. The original shareholder will transfer, pledge or otherwise dispose of the stock rights that are still registered in his name. If the transferee shareholder, on the ground that he has an actual right to the stock rights, requests that the disposition of stock rights be invalid, the people's court may refer to the provisions of Article 311 of the Civil Code.If the original shareholder's disposal of equity causes losses to the transferee shareholder, and the transferee shareholder requests the original shareholder to bear the liability for compensation, and to bear corresponding responsibilities for the directors, senior managers, or actual controllers who are at fault for failing to complete the change registration in a timely manner, the people's court shall support it; If shareholders are also at fault for failing to complete the change registration in a timely manner, the responsibilities of the above-mentioned directors, senior managers or actual controllers may be appropriately reduced.

[7] Article 183 of the Company Law: If a company is dissolved due to the provisions of Article 180 (1), (2), (4), and (5) of this Law, a liquidation group shall be established within 15 days from the date of the occurrence of the cause of dissolution to begin liquidation. The liquidation team of a limited liability company is composed of shareholders, while the liquidation team of a joint stock limited company is composed of directors or personnel determined by the shareholders' meeting. If a liquidation team is not established within the prescribed time limit for liquidation, creditors may apply to the people's court to designate relevant personnel to form a liquidation team for liquidation. The people's court shall accept the application and promptly organize a liquidation team to carry out liquidation.[8] Article 18 of the Second Interpretation of the Company Law: If the shareholders of a limited liability company, the directors and controlling shareholders of a joint stock limited company fail to establish a liquidation group within the statutory time limit to start liquidation, resulting in the depreciation, loss, damage or loss of the company's property, and the creditors claim that they should be liable for the company's debts within the scope of the losses, the people's court should support them according to law.

If shareholders of a limited liability company, directors and controlling shareholders of a joint stock limited company fail to fulfill their obligations, resulting in the loss of the company's main assets, accounting books, important documents, etc., and are unable to carry out liquidation, and creditors claim joint and several liability for the company's debts, the people's court shall support them in accordance with the law.

The above situation is caused by the actual controller, and if the creditor claims that the actual controller shall bear corresponding civil liability for the company's debts, the people's court shall support it in accordance with the law. [9] Article 19 of the Second Interpretation of the Company Law: After the dissolution of the company, the shareholders of a limited liability company, the directors and controlling shareholders of a joint stock limited company, and the actual controller of the company maliciously dispose of the company's property, causing losses to the creditors, or defraud the company registration authority to cancel the registration of a legal person with a false settlement report without going through liquidation according to law, and the creditors claim that they should bear corresponding liability for the company's debts, The people's court should support it in accordance with the law.[10] Article 20 of the Second Interpretation of the Company Law: When a company is dissolved, it shall apply for cancellation of registration after liquidation according to law. If a company undergoes deregistration without liquidation, resulting in the inability of the company to proceed with liquidation, and creditors claim that the shareholders of a limited liability company, directors and controlling shareholders of a joint stock limited company, as well as the actual controller of the company, are responsible for paying off the company's debts, the people's court shall support them in accordance with the law. If a company undergoes deregistration without being liquidated in accordance with the law, and a shareholder or a third party promises to be responsible for the company's debts when deregistrating with the company registration authority, and a creditor claims to bear corresponding civil liability for the company's debts, the people's court shall support it in accordance with the law. (2018) Supreme People's Court No. 366.