Study On Shareholder’s Inspection Of Books And Records With An Improper Purpose

The thesis concentrates on the improper purpose criteria when safeguarding shareholders’ right to inspect books and records,pursuant to Provisions of the Supreme People’s Court on Several Issues concerning the Application of the Company Law of the People’s Republic of China(IV)(hereinafter “Application of company law(IV)”),art.8.Shareholders’ right to inspect books and records(hereinafter “shareholders’ right of books”)originated from the United States around one century ago.It firstly developed in closed corporation,and later was adopted in the governance of non-closed corporation.The term “shareholders’ right of books” connotes shareholders’ demands for access to corporate books and records for the sake of legitimate interests.The thesis begins with judicial practices within one year after the implementation of Application of company law(IV).Specifically,the rules summarized from the judicial practice can be regarded as an evaluation,so as to assess whether the law itself has been effectively implemented.On the other hand,the jurisprudence behind the law determined the legitimacy and stability of law,and also determined the specified legal interests that it intended to offer protection.Considering the Application of company law(IV),art.8,its rules cannot be isolated from the relevant foreign laws by legal transplantation.Legal transplantation refers to how the law has been borrowed and developed under the circumstance of Chinese law.In this thesis,there are six paragraphs pertaining to shareholders’ right of books on proper purpose.The Introduction starts with what triggered me to select this topic.And then firstly cited from the terms of law,generally the introduction addressed the sphere and disputes of the aforesaid right.Secondly,the literature review presents an overview of academic controversy by many scholars.Thirdly,the methodologies of the thesis are briefly concluded.When analyzing the shareholders’ right of books,the hidden jurisprudence and supplementary tools shall be well prepared,otherwise the aforesaid right is nothing more than “right in books”.The first paragraph firstly clarifies the issues on the hierarchy of the aforesaid right,the characteristics of accounting books and the intention on improper purpose limitation,which mainly focus on the definition and scope involved of the aforesaid issues.This brings up three issues when applying the Application of company law(IV),art.8.(a)Shareholders’ such request may be denied because shareholders engage in competitive business with the company.In this case,are shareholders obliged to undertake non-competitive business with the company which they demand request for access to books? The applicable law does not exist in Chinese law.(b)Shareholders’ such request may be denied due to the intention to disclose the information and may damage the company’s lawful interest.Great contradiction has been shown from the judicial cases within one year after the implementation of Application of company law(IV).Precisely,the information in most cases was interpreted as commercial secrets.However,interpreting the word in a broad way will lead to companies’ passive attitude towards shareholders’ request.On the contrary,if interpreting in a narrow way,it will be futile to protect shareholders’ right.(c)Shareholder had damaged companies with the information demanded,and later requested inspection again.In this case,no supplementary procedures can be clearly applied,as well as the request for non-disclosure agreement.To sum up,how to judge the former conduct remains as an unsolved issue.The second paragraph serves as a foundation of the aforesaid rights from the perspective of economic analysis of law,i.e.,to evaluate the internal value of the right.The internal value can be categorized as intrinsic value and instrumental value,based on whether the right could be independently realized,and whether it is procedural right or substantial right.As per instrumental value,this thesis submit that civil courts seem to neglect the importance of shareholders’ right of books.Obviously for the instrumental value,there’s a way to go,inferring from judges’ attitude,as well as the vacancy of the supplementary procedures.As per intrinsic value,mainly there are two parts of value.One is to strengthen the rights of minority shareholders.The other is to keep balance between different parties involved.To some extent,economic analysis of law provide two feasible approaches when considering the abovementioned value.Although the paradigm on economics of law cannot be fully deployed in corporate governance,the judging criteria “value” can be utilized to deduce the further development of Application of company law(IV),art.8.The third paragraph returns to foreign laws transplanted.It focuses not only on the laws itself,but also on legal system,constitution of legal resources,judicial practices and judicial logic of foreign laws.The terms themselves are not complicated;nonetheless,the main issue is the application of foreign law in China.Borrowing from other countries’ laws does not mean simply to copy and paste,but to draw upon strengths and make best use of advantages.Besides,the laws we borrowed shall be fully discussed to promote further improvements.The fourth paragraph puts forward some appropriate solutions when facing the proper purpose dilemma under Application of company law(IV),art.8.The solutions are based mostly on supplementary procedures and rules.Firstly the shareholders’ obligations are proposed to meet the basic needs of laws,and also the feasibility is concluded.Secondly the inspector rules are set out on the grounds of theses from many scholars,so as to argue that how the aforesaid rules can be applied in China.Thirdly,supplementary procedures shall be considered in the courts.Especially to judge from the perspective of value itself will protect and balance the legal interests.The thesis ends with the fifth paragraph by demonstrating the theme of the thesis,as well as the weaknesses.