Research On The Controlling Shareholders' Duty

Corporation control right is the right by which the subject can possess, control and handle all available resources, and exert a significant influence on important policy-making of the corporation. The man who owns the corporation control right shall gain more leverage between conflicts of the shareholders'interests. To have the corporation control right means having the rights to make policy, to manage routine duties as well as to run the financial affairs. Meantime, by using theses rights, one can pursue the maximum of one's interests. The controlling shareholder owns the corporation control right in fact. When they are pursuing the maximum of their interests, they usually sacrifice the interests of other shareholders. Therefore, many modern corporation laws stipulate fiduciary duty on controlling shareholders in order to avoid the controlling shareholders abusing control to protect the minority shareholders'interests.To transfer the control of the corporation isn't only to make over the shares of the corporation, also to make over the domination. So, the transfer of corporation control right is certainly to have great influence on interests of the corporation and minority shareholders'. In view of the special position of the controlling shareholders on the process of control transfer, in order to prevent the controlling shareholders to run after the maximum of their interests, to abuse the corporation control right, and to damage the minority shareholders'interests, we should stipulate duty on them accordingly. In fact, the duty of controlling shareholders in the process of control transfer particularly reflects their fiduciary duty in the field of transferring corporation control.This thesis expounds the controlling shareholders'duty in the process of control transfer. Except for foreword and conclusion, this thesis can be divided into three parts.The first part is mainly about the concept of corporation control right, controlling shareholders and control transfer, as well as the theory of controlling shareholders'duty. Firstly, the concepts of corporation control right, controlling shareholders and control transfer are to be specified. Aiming at corporation control right, referring the conclusion drawn in the field of economy and law, combining the relevant statement of our country, this thesis defines the concept of corporation control right. Targeting on controlling shareholders, through combining the concept from other countries with what stipulated in Chinese Corporation law, the concept of controlling shareholders is defined in this thesis. Directing against control transfer, this thesis delimits it by comparing control transfer with common stock transfer. Secondly, this part is mainly about the theory basis of controlling shareholders duty, studying the relevant theory of Anglo-American law and continental law. In the theory of Anglo-American law, this thesis studies chiefly on fiduciary relationship, the rule of equity and the principle of equality between shareholders. In the theory of continental law, it studies primarily on fiduciary relationship, partner relationship and special judicial relationship. In addition, this thesis analyzes the coming into being of the controlling shareholder's duty in the aspect of legal principle.The second part mainly deals with observing and researching on the controlling shareholders'duty in the process of control transfer, pointing out that the duty of controlling shareholders in the process of control transfer is the extending of their duty of care and duty of loyalty, embodying specifically the fiduciary duty in the field of corporation control transfer. This thesis focuses on the concrete reflection of controlling shareholders'duty during the control transfer, studying their reasonable investigation and due care duty, information disclosure duty, fair dealing duty and sharing the opportunity duty. On the duty of reasonable investigation and due care, research is done from three respects of analysis of legal principle, practice and dispute of it. On the duty of information disclosure, research is carried out on the basis of analysis of legal principle of origin and legal practice of it. On fair dealing duty, study is made by analysis of legal principle of origin and legal practice of it. On sharing opportunity duty, the study is done mainly by analyzing legal principle of origin, practice and dispute of it. Following each description of duty, this thesis elaborates the author's position.The third part mainly deals with evaluation of the current legislative situation and proposal for the relevant legislation improvement on the shareholder's duty during the process of control transfer in China , trying to restrict their abusing corporation control right, so that to better protect the minority shareholders'interests. This part basically analyzes our stipulation on controlling shareholders'duty in the process of control transfer, indicating which sections needs to be criticized on their reasonable investigation, information disclosure and fair dealing duty, thus sets forth proposals as following: First, general stipulation relating to controlling shareholder's duty shall be made in Company Law of the People's Republic of China, which includes duty of care and duty of loyalty, as well as embodying the civil and criminal liability caused by violation of the duty; Second, stipulations relating to reasonable investigation duty of the controlling shareholder shall be made in Company Law of the People's Republic of China and Securities Law of the People's Republic of China; Third, to make an explicit stipulation on the controlling shareholder's information disclosure duty in the supervision rule and judicial interpretation by relevant institution; Forth, with regard to general self-dealing conducted by controlling shareholder, stipulations relating to fair dealing duty of controlling shareholders should be made in the process of control transfer in Company Law of the People's Republic of China on the original basis; Fifth, to prescribe the sharing opportunity duty in the supervision rule and judicial interpretation by relevant institution.