Fiduciary Duties in Corporate Law and Privacy Law

Articles 147 and 148 of the Company Law of the People\u27s Republic of China ( Chinese Company Law ) establishes that directors owe a duty of care to their companies.1 However, both of these provisions fail to explain the role of judicial review in enforcing directors\u27 duty of care. The duty of care is well-trodden territory in the United States, where directors\u27 liability is predicated on specific standards. The current American standard, adopted by many states, requires directors to discharge their duties with the care that a person in a like position would reasonably believe appropriate under similar circumstances. However, both the business judgment rule and Delaware General Corporate Law (DGCL) Section 102(b)(7) shield directors from responsibility for their actions, which may weaken the impact of the duty of care requirement on directors\u27 behavior. To better allocate the responsibility for directors\u27 violations of the duty of care and promote the corporations\u27 development, it is essential that Chinese company law establish a unified standard of review governing the duty of care owed by directors to companies. The majority of Chinese legal scholars agreed that a combination of subjective and objective standards would function best. Questions remain regarding how to combine such standards and implement them. In order to promote the development of China\u27s duty of care, these controversial issues need to be solved. This article argues that China\u27s Company Law should hold a first-time violator of the duty of care liable only in cases of gross negligence but hold directors liable in the cases of ordinary negligence if they have violated the duty of care in the past. Technology companies such as Facebook have long been criticized for abusing customers\u27 personal information and monetizing user data in a manner contrary to customer expectations. Some commentators suggest fiduciary law could be used to restrict how these companies use their customers\u27 data. Under this framework, a new member of the fiduciary family called the information fiduciary was born. The concept of an information fiduciary is that a company providing network services to collect, analyze, use, sell, and distribute personal information owes customers and end-users a fiduciary duty to use the collected data to promote their interests, thereby assuming fiduciary liability if it misuses or misappropriates customer data. Although the possibility of an information fiduciary has generated significant attention, neither questions about the scope of the information fiduciary\u27s duty of care nor whether corporate law\u27s fiduciary duties are compatible with the information fiduciary duty, have been satisfactorily answered. In 2021, Facebook was renamed Meta Platforms, Inc. to expand business related to the Metaverse, which is expected to bring about many new digital products. The establishment and development of the information fiduciary duty will help prepare the legal framework for this new era of digitization. This article proposes a model to implement the information fiduciary\u27s duty of loyalty and duty of care to end-users in today\u27s information age by imposing these duties on Data Protection Officers (DPOs). First, this article sketches the contours of information fiduciary duties on DPOs, examines how these duties can be structured, and clarifies how they interact with the duties owed by directors to the company. Second, this paper addresses the use of layered fiduciaries to alleviate the potential conflict caused by the information fiduciary duty. Third, this article discusses in detail how the fiduciary duties imposed by Delaware corporate law can be applied to the field of digital privacy and consumer data. Directors\u27 duties of care and loyalty in corporate law have developed over decades to form a useful system that is applicable in developing the information fiduciary duty. Implementing the information fiduciary duty can benefit from and be partially guided by existing law, like the director\u27s duty to inform under the duty of care and the duty to act in the best interests of the company under the duty of loyalty. Lastly, this article explores how the information fiduciary duty can efficiently regulate multinational corporations\u27 international data transfers, a rarely discussed, yet important aspect of world economic development