Legal Regulation Of Related Party Transactions Of Listed Companies In China

In China, connected transactions widely exist in the business activities of the listed companies. Connected transaction means a transaction in which resources or liabilities are transferred between connected parties, wether or not it involves any consideration. It likes a double-edged sword, on the one hand it can cut down the transaction cost,help enlarging the scale of a business and realizing the strategic objectives of the whole business group. On the other hand, it may produce some negative impacts, such as breaching the law of fair competition , transferring capital and profits between connected parties, and thereby impair the interests of the company, the middle and small shareholders and. creditors. Should connected transactions be prohibited or reduced ? How to protect the interests of the country, the creditor and the middle and small stockholds? We should have a correct attitude on this: we should give connected transactions positive legal provisions not passive prohibitions, to establish reasonable equilibrium machine-processed between it' s positive functions and it' s negative functions. The article, adopting the approach of comparative law, reviews and analyzes how to standardize unfair connected transaction in order to protect the interests of middle and small shareholders and creditors in the listed companies, and in it the major analyzes the specific systems of provisions from the angle of securities law and company law.In view of the thought upward, this article separates into four chapters to proceed discussing.Part I focuses on the basic theories about connected transactions of the listed companies. First of all the author gives out the definition of connected transactions used in this, and reviews the features of connected transactions. And then, through the comparision of legislations of various countries, the author explains the assessing standards and the scope ofconnected partes. Our country should make additions to the conganitition of connected parties. Finnally, through the analysis of the advantages and disadvantages of connected, transactions, the author reaches a conclusion that it is necessary to standardize connected transactions. We should regulate connected transactions not but prohibit it.Part II focuses on the demonstration investigation and legislation investigation of connected transactions of the listed companies of our country. Through the demonstration investigation, the author goes deeply into analyzing the new characters of connected transactions. Finnaly, the author analyzes the present situation of legislation about the connected transactions, and points out the defects and shortcomings. At the last of this part, the author puts forward some proposals and suggestions of amending the law.Part III focuses on the fundamental principles concerning connected transactions. The principle of publicing requests the listed companies must disclose fully the content of information concerning connected transactions. Protecting the proper interests of the middle and small shareholders and creditors and maintaining the stability and prosperity of the capital market is the intention and purpose of the legal provisions to the connected transactions. We should stress on the fiduciary duty of the controlling shareholders and the protection of creditors.Part IV focuses on how to perfect the legislation of connected transactions of the listed companies of our country. This part is the focal point of this article. There is not a complete system about the legal provisions of connected transactions. Drawing lessons from the legislation experience of other countries, the author brings up a series of specific systems: strict examination of listing, rigid granted procedure, enough disclosure of information and rigid responsibility of law.