| According to the corporate opportunity doctrine, it is corporate interest, rather than the claim of corporate property, that decides whether a business opportunity belongs to a corporation. Corporate interest begins to accumulate when the corporation undertakes an opportunity, the process of which can be divided into two stages, i.e., the discovering stage and the implementation stage. Throughout the process, the corporation may lose its interest in the opportunity as situations change and it is allowable for a director to exploit the opportunity when the corresponding conflict of interest vanishes. The optimum rules should reflect the variations. The discovering stage is the phase where the corporation has not invested any soft or hard resources into the opportunity, for which less strict rules should apply. At this stage, an opportunity within the line of business is presumed to belong to the corporation. After offering the opportunity to the corporation with necessary disclosure, a director may take advantage of the opportunity if he gets approval of the corporation, or the opportunity has been rejected by the corporation, or the corporation is unable to utilize the opportunity, or the counterparty is unwilling to deal with the corporation beforehand. At the implementation stage, corporate interest in the opportunity becomes realistic due to the corporation's investment, which makes strict and prophylactic rules essential. The director may pursue the opportunity only after full disclosure and receiving the corporation's approval. This set of two-stage rules that include flexible characterization test and differentiated defenses would provide a desirable framework for the transplantation of corporate opportunity doctrine into Chinese corporate law. |
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