On The Litigant Of Shareholder Derivative Suit

The derivative suit plays an important in maintaining the shareholders management role in the corporation and perfecting the management structure of the corporation, but the operation mechanism of this system breakthrough the autonomy of the corporation. If arranged properly this system can be a sharp sword of the well-meaning shareholders to maintain the corporation and their benefits. But if arranged improperly it may be the tool of the vicious shareholders to interfere with the management of the corporation and pursue their personal benefits. Rationally determine the source of litigants, the price for achieving the derivative litigation system is of great significance. Besides based on the analysis of the relevant legislation, it also references to foreign theory and the practical experience. And on this basis, modest revisions are given for the constructing shareholder derivative litigation system of china, for discussion.The first part of the article first orients the shareholder's derivative action from its concept, nature and function, wherein we can have perpetual understandings of the system macroscopically. After that the author carries on the analysis to the legal basis of shareholder's derivative action, This classification is not only theoretical significance, but also have practical significance.The second part of the article is going to discuss the qualification of plaintiffs, who take the derivative action. First of all, is about the analysis of eligible shareholders of the legal restrictions on the plaintiff, mainly due to the need for balance among the interests of shareholders and the involved interests of the company and shareholders, and the needs to fight against the shareholders abuse of the judicial process. China's Law on Limited shares and the shareholders of a company can bring the qualifications of each of the derivative litigation. Shareholders in a limited liability company could have not the limit of holding time and holding ratio, but the Company's shareholders will hold together for 180 days or more separate, or more than 1% of company shares may institute legal proceedings. Foreign qualified for the plaintiff to restrict mainly include ownership rules at that time, continue fault principle, the principle of sustainable holdings, WASHING rules, etc. However, in light of the present situation in my country , attract foreign practices should have a choice , the holding period should not be too long for Company plaintiff's eligibility requirements , Should be holdings amount as plaintiffs standards ,not the holding ratio. In order to prevent malicious litigation, in China a security system should be set up; For "WASHING rules," we can absorb them.The third part of the article discusses the scope of the defendant's Derivative Action, China's judicial and legislative refer to the practical experience of United States, the scope of a shareholder derivative litigation, the defendants not only includes company directors, supervisors, managers and other internal staff, the company also includes a third external person, such a system designed for our initial establishment of the status quo derivative litigation system is not desirable. The defendant scope of derivative Action should be limited to the directors of companies, the directors of the board of supervisors, managers and other senior management staff and controlling shareholders and the liquidator of actual control, but does not include corporate debtor, the executive officers who violate the interests of the company and other externals. Speculative litigation and regulatory mechanism is not sound restrictions, which not only helps prevent the misuse of derivative litigation, insurance companies to operate independently, they can also fulfill derivative litigation in protecting their interests, and protect the interests of small hare holders in the first place.What litigation position should the company be during derivative litigation, there are many domestic and foreign sayings in the theories, Part IV of this paper provides an analysis and recommendations. The company is an indispensable party during the legal proceedings in United States, without which the proceedings will not be able to continue. British jurists were of the view that, if the board of directors or shareholders did not agree to begin derivative proceedings, the plaintiff is unable to appear, then, the company named as a defendant; the purpose is that the company is therefore bound by the court and benefit from. Japanese commercial law in the legislature adopted a more relaxed approach, neither the plaintiff in the derivative litigation. is not a defendant, but in order to prevent the plaintiff in the shareholder litigation misconduct incurred loses, director of complicity with the defendant or the plaintiff shareholders, intentionally lost to get profit in such circumstances. Company could be together with other shareholders by law, at the beginning of the proceedings, the proceedings as a co-litigant; But if the companies participating in the proceedings will have undue delay or increase the heavy burden to the court, are permitted. The author believes that the company should not be classified as defendant, nor should they be necessary Levy common litigants, It may be in court as a witness in the shareholder derivative litigation, as the most directly bear the damage, is the most direct testimony against the fact that no indirect links, their cases should be "the only" witness, no one can replace his witness status.The article explored the litigation status of other shareholders in the last part of the article. In Japan and the United States, the litigation status of other shareholders in the shareholder derivative proceedings, a similar structure, that the two countries both allowed other shareholders to participate in the proceedings, but for efficiency, has imposed certain restrictions. In the course of our legislative improvements have two options open to it. One is in the "Code of Civil Procedure," the existing framework arrangements are as follows: If a smaller number of other shareholders to participate in the proceedings, in accordance with the rules of the common litigation; If such a large number of shareholders. Then a large number of proxy litigation rules, as previously stated plan to introduce a system to participate in the proceedings.