Research On Shareholders’ Right To Inspect Accounts In Limited Liability Companies

Due to vagueness of the relevant provisions relating to shareholder’ inspect rights under the current company law,the application of these provisions has caused many disputes in judicial practice."Provisions of the Supreme People’s Court on Several Issues relating to application of the Company law of the People’s Republic of China(IV)"(hereinafter referred to as “judicial interpretation IV”)has to made up for the shortcomings of the current company law in many aspects,such as the exercising right of shareholders whose ownership have been transferred;the listing situations of rules of "unfair purpose";the provisions of inspection location,time and scope;the provisions of limitation stipulated in the articles of associate and the shareholders’ agreement;the confidential obligation of confidential information for shareholders and the third party who assist in inspection;the compensation responsibility of the directors and senior management personnel for the production and preservation of documents in accordance with law and regulations.However,there are still many disputes in the practice of the inspection right.This paper emphasizes on the right of checking accounts of company,stipulated in the article 33(2)of company law,combined the practices both here and aboard with theory.The first part of this paper is a brief overview of the basic issues of the shareholders’ inspection right,including the legal analysis and legal origin of theshareholders’ inspection right.Then the paper collects the judicial practices in Shanghai from January 1,2017 to March 1,2018,and make analysis on the problem about the subject of litigation,the objection of the litigation,the refusal reasons of company and the reasons shareholder brought in suit according to the eighty-two judgments,making an introduction about the status quo of China’s judicial practice.The second to sixth chapters of this article combining the revised terms and judicial practice cases of the judicial interpretation IV of the company law.The theory combines practice to discuss the five major issues.The second chapter mainly discusses the qualification of the plaintiff’s shareholder,including the issue of the right to check the accounting books of the original shareholders,shareholders whose capital contribution is in deficiency,successor shareholders,nominal shareholders and actual investors,shareholders who are also directors and supervision.Among those problems above,this article,combining with the fourth issue of judicial interpretation,focuses on original stockholders’ right of reviewing the accounting books.It mainly discusses three aspects: the “primary evidence”,the “shareholding period”,and the limitation of “specific document materials”.The third chapter mainly discusses the pre-procedure issues of account book reference rights,and mainly discusses that whether the shareholders do not perform pre-procedure can directly bring a lawsuit or not,the perform problem in the situation that the defendant company refused to sign or the defendants’ address is unknown,the application of 15 days of statutory period and of the refusal reason of the defendant to prevent the plaintiff inspection.In addition,this article discusses the issue of the burden of proof of the plaintiff and defendant on both sides in the pre-procedure.The fourth chapter mainly discusses the scope of the accounting book reference right,which includes the issue of the right to access the original accounting documents and the limitation of the scope of accounting books prescribed in the company’s articles of association and shareholder agreement.The fifth chapter mainly discusses the definition of “unjust purposes”,combining with “unjust purposes” standards prescribed in the judicial interpretation IV.This chapter discusses whether the issue of competition between shareholders and the company constitutes an improper purpose and whether the disclosure of secretinformation of accounting books by shareholders constitutes an improper purpose.The sixth chapter mainly discusses the implementation of the accounting book reviewing case,including the issue of professional third party auxiliary inspection and the time and place of checking the accounting book.Through the discussion of the above-mentioned five major issues in combination with the theory,it is hoped that it will be beneficial to the application of the shareholders’ right to information system in practice.