Legal Status Of Corporations In Derivative Suits Of Shareholders

The system of derivative suits of shareholders is a crucial one which is dedicated toprotecting legitimate interests of medium and small shareholders in a corporation. Its titlesdiffer in countries, containing shareholders in litigation and shareholders representativelawsuits. This system refers to one system, in which specific shareholders file a derivativesuits to protect legitimate interests for the corporation after medium and smallshareholders in a corporation request the corporation for a lawsuit but the corporationdenies it on the condition that legitimate interests are violated by real controllers, whichmakes the corporation more well-organized and more powerful in the management.Established in newly-amended the corporation law in the year of2005, the system ofderivative suits of shareholders that just specified conditions for shareholders andpre-procedures and ranges of defendants in the course of derivative suits did not makespecific explanations for the legal status of the corporation in derivative suits. Therefore,legal status of the corporation in derivative suits should be specified in related laws, whichcan contributes to the perfection of this system, and meanwhile to better protection ofinterests of the corporation and its medium and small shareholders.Integrating with the concept and characteristics of this system, this thesis explains thetheory of derivative suits of shareholders and the practice, and discusses the legislativechoice on the legal status of the corporation in derivative suits, through comparing andanalyzing instances of legislation about it in foreign countries, in a conclusion that thecorporation should file a derivative suits as a independent litigation participant. The authorsuggests that we should specify the legal status of the corporation in derivative suits inChina as soon as possible. In other words, the corporation should file a derivative suits asan independent litigation participant, which could more effectively protect interests of thecorporation and its medium and small shareholders and at the same time could make thissystem more functional.