Research On The Legal Issues Of Usurping Corporate Opportunities By Controlling Shareholders

Corporate opportunity doctrine is an important theory in common law.It originally means the directors and top managers mustn’t usurp business opportunities which belong to their companies and benefit from them.As the phenomenon of controlling shareholders prejudicing companies and minority shareholders’interests by abusing their control power is increasingly spread, controlling shareholders have bocome the main dangerous source of usurping corporate opportunities.Therefore,it is undoubtedly logical that the corporate opportunity doctrine is legallly binding for controlling shareholders.In2005,Chinese new Corporation Law adopted this doctrine.However,the legal provision is too simple to cover the abundant meanings of corporate opportunity doctrine,including prohibiting controlling shareholders’usurpation.That means there is a loophole in our legal system.As an important part of controlling shareholders’fiduciary duty,the establishment of corporate opportunity doctrine of controlling shareholders is not only a revision to the legislative limitations,but also a response to the practical needs.In addition,the doctrine’s codification has its solid theoretical foundation.On one hand,it reflects the extension of basic principles of civil law in the field of corporation law.On the other hand,it is the principle of equality of rights and duties’s concrete embodiment in the field of corporation law.There are two core problems about corporate opportunity doctrine of controlling shareholders.One is how to identify controlling shareholders’usurpation. The key in this problem is how to identify corporate opportunities, about which judgment standards are varied in common law.Each standard has its advantage and disadvantage.All we need to do is think over every relative factor and try to optimize.The other problem is in which situations controlling shareholders’usurpation is legal.To be specific,it means whether controlling shareholders can make use of corporate opportinities when the opportunity has been abandoned or the company can’t utilize this opportunity or the company hasn’t reached a resolution about the opportunity,and how to operate in procedure under these situations. Through the study of comparative law,this article combines some classical cases in common law and some theory elaborations at home and abroad. In this way,this article tries to survey what corporate opportunity doctrine of controlling shareholders should be.In my opinion,legislation about this issue is urgently required and the direct regulation mode is better.Something we have to note is both substantive law and procedural law are important.Moreover,supervision and accountability system should be parallel.In this article,I put forward my own ideas and legislative suggestions on such issues like how to identify controlling shareholders, how to identify a corporate opportunity, in which situations controlling shareholders’usurpation is legal and how to improve companies and minority shareholders’remedy methods.What I hope is to fill the theory loophole in some degree and provide certain reference for future legislation.