Company Representative Action

In China, the company law has played an important role in promoting the booming of market economics and the establishment of the modern enterprises regulations, since it came into effect in July 1st, 1994. However, with the development of market economics reform and the economics globalization, many problems appear because of the ill operation, the managers infringe the articles of incorporation and the regulations, which damaging the right and interests of the corporation and shareholders and violating the corporation's property. The lack of legislation prevents the economics from running normally. To solve the problems, Representative Action came into effect through the amendment of Company Law, by the No. 10th Standing Committee of the National People's Congress at the No. 18th meeting. The research on the Representative action system is meaningful in the establishment and healthy operation of our modern corporation.The No.152 clause of revised Company Law has Representative Action rule, however, it is comparatively summary, need to be studied further for detail. This paper is to provide some legislative suggestion on company law and try some suggestion on civil litigation, by studying on Representative action, comparing with those advanced.This paper focuses on the research in four aspects:First, mainly on the definition and origination of Representative action, and on the difference between Representative action and direct lawsuit by the shareholders. And introduce the theory worldwide evolution and system value.Second, study on the core issue of Representative action, which says that Representative action is the judicial review to the company management power, which should be balanced between company autonomy and judicial intervening.Third, emphasize on incentive mechanism and restrictive measure of Representative action proceedings, by comparison with other advanced Representative action systems, seeking for the balance point between protecting shareholders'litigious right and preventing from shareholders litigious right abuses. Analysis national Representative action legislation and make suggestions accordingly on legislation and practice.Fourth, on some Representative action adjudication issues, recommend on statutory provisions for the legal status of company and other shareholders in the procedures.