Study On The System Of Former Shareholders’ Right To Know

Modern company law gives lots of rights to shareholders, and as a fundamental rightamong them, shareholders’ right to know plays an important role in the protection ofshareholders’ effective exercise of other rights. With the amendments to the Chinese2005"Company Law", the system of shareholders’ right to know has been established. Thesystem, to some extent, has effectively protected the shareholders’ interests, especially theinterests of non-controlling shareholders of the company. Since the implementation of thissystem in2006, the number of litigation cases related to shareholders’ right to know hasbeen gradually increased, and the issues of controversy cases present diversification whichrelate to the subject, the scope, the goal and the allocation of the burden of proof of theshareholders’ right to know. There are different standards about the subject qualification ofshareholders’ right to know in judicial practice, resulting in lots of unlawful infringement tomany shareholders (especially for former shareholders who exited the company tosafeguard their own interests based on the right to information) in part. Among manylawsuits on the subject of shareholders’ right to know, the theorists and practitioners havedifferent opinions about whether the former shareholders shall have the right to know theinformation of company during its original holdings. This paper tries to clarify the conceptsof the shareholders’ right to know and related theories, and focuses on analyzing thenecessity as well as the advantages and disadvantages for the former shareholders to havethe right to know from both the theoretical and practical level, for the purpose of providingtheoretical support and solutions for the former shareholders to enjoy the right to know. Thispaper aims to provide a reference for the legislation of the former shareholders’ right toknow and to provide useful assistance to the judicial practice by using the solutionmentioned.Except introduction and conclusion, the article consists of five parts.The first part introduces a case of shareholders’ right to know which occur betweenWangqiufa, Wangyanqing, Chenfang, Wangyuxuan and Beijing Wuyue Machinery andEquipment Co., Ltd, Wangyusuo, Cuixiaoping briefly.The second part summarizes the issue of the selected case, and comes up with threeproblems to discuss, which based on the issue of the case and the appellant claims raised during the first trial.The third part discusses the theory about former shareholders’ right to know. This partmainly contains four aspects: Firstly, the concept of and the meaning of the shareholders’right to know, the meaning of the shareholders’ right to know mainly contains theshareholders’ inspection right, shareholders’ inquiry right, the claim for outside inspector,and the right of action related to the exercise of these rights; Secondly, the nature andtheoretical basis of the shareholders’ right to know, the theoretical basis of the shareholders’right to know mainly discusses asymmetric information theory and faith obligation theory.Thirdly, the necessity of the former shareholders’ right to know, this section mainly containslegislative purpose, the principle of honesty and fair principles of civil law, and the thirdlevel right to know outside of shareholders’ qualification. Fourthly, this section analysesboth the advantages and disadvantages of the former shareholders’ right to know.The fourth part introduces the present judicial situation of the former shareholders’right to know. This paper concludes that the present judicial situation of the formershareholders’ right to know is not optimistic by collecting relevant legal documents of localcourts around and knowing about the judgments in juridical practice related to whether theformer shareholders have the right to know the information of company.The fifth part provides some advice to improve the former shareholders’ right to know.On the basis of the previous text’s affirmation that the former shareholders have the right toknow the information of company during its original holdings, this section sets some limitson the scope, the purpose, the time, and related liability for the former shareholders from theperspective of balancing the interests, which is different from the company’s existingshareholders. In addition, this section introduces the system of outside inspector into thesystem of the former shareholders’ right to know for the purpose of protecting the formershareholders’ legitimate rights and interests and a better safeguard of company’s interests atthe same time.