On The Civil Liability Of The Actual Controller In The Affiliated Transaction

In recent years, the cases of actual controllers using the affiliated transaction toharm the interests of the company often appear. Our country’s laws regularizebehaviors of actual controllers very later, and the content is not specific. In theprocess of investigating their civil liability, many problems appear. This paperdiscusses the problem of actual controllers’ civil liability in the affiliated transactionby the case of financial fraud of Zi Xin Company in2011.After the foreword, the article is divided into three parts:The first part is the identity of actual controllers’ cognizance. The concept of theactual controller in the law is abstract and misty, so it is very import to confirm thetypes and the judgment standard of the actual controller. The part discusses the typesand the judgment standard of the actual controller at the beginning. The actualcontrollers include five types’ people of through indirect investment, contract,relatives, and other relationships for control, and did not fulfill the legal procedures,special status under temporary. The judgment standard of the actual controller is thestandard of essential possibility of the controlling. Combining the fact of case, thearticle deems related parties to be the Zi Xin Company and subordinate companies.The second part makes a judgment whether the actual controller of the casebreach fiduciary duty. Our country’s laws rule the actual controllers’ fiduciary dutyfrom two aspects of entity and procedure. To judge whether the actual controllerbreach fiduciary duty has two standards, they are subjective standard and objectivestandard. The article tends to use the objective criteria. The objective criteria containtwo standards, including interest damage standard and the legal procedure standard,and the interest damage standard is the main standard. Then this part made a judgmentthat the actual controller of the case breach fiduciary duty from two aspects of entityand procedure.The third part makes the identification of causality of the case in relation to the actual controller. This part determines criterion of the causality in the case of actualcontrollers firstly. It can use the direct causation rules to judge simple and obviouscausality. It can use the considerable causality theory and the legislation purposetheory to judge complex causality, and determining the considerable causality by themethod of two steps. The article analysis the causal relationship between of actualcontroller’s behavior and damage result in case by the above criteria.The conclusion of the article is that the relevant party in the case is the actualcontroller of Zi Xin Company and subordinate companies. And he breached fiduciaryduty. There is the causality between his behavior and the damage results. The actualcontroller in the case shall bear civil liability, and Compensate for the losses ofvictims.