Legal basis: People's Republic of China (PRC) Company Law.
Article 21 The controlling shareholders, actual controllers, directors, supervisors and senior managers of a company shall not use their related relationships to harm the interests of the company. Anyone who violates the provisions of the preceding paragraph and causes losses to the company shall be liable for compensation.
Article 22 The resolutions of the shareholders' meeting, the shareholders' meeting and the board of directors of the company are invalid if they violate laws and administrative regulations.
Directors shall be responsible for the resolutions of the board of directors. Where the resolution of the board of directors violates laws, administrative regulations, the articles of association or the resolutions of the shareholders' meeting, thus causing serious losses to the company, the directors who participated in the resolution shall be liable for compensation to the company. However, if it is proved that an objection was expressed during the voting and recorded in the minutes of the meeting, the director may be exempted from liability.