The Legal Protection Of Shareholders’ Claim For Abstract Profit Distribution

The company’s decision on the distribution of after tax profits belongs to the company’s autonomy,and the judiciary is conservative in intervening in the company’s profit distribution.Before the promulgation of the judicial interpretation(4)of the company law,the shareholders mainly took such measures as objecting to the shareholders’ right to request for repurchase,requesting the court to cancel the profit distribution resolution or confirm that the profit distribution resolution is invalid,requesting the judicial dissolution of the company,transferring shares to withdraw from the company,and shareholders’ representative litigation to provide relief,which is difficult to protect the shareholders’ right to request Abstract profit distribution.With the further exposure of the defects of corporate autonomy and capital majority decision,more and more large shareholders or controlling shareholders infringe on the right of other shareholders by manipulating the board of directors and abusing their rights.In this context,the Supreme People’s court passed the judicial interpretation(4)of the company law in 2017,and clarified the direct basis for protecting shareholders’ claim for abstract profit distribution in the proviso of Article 15.The premise of judicial relief is that the company’s shareholders abuse their rights and lead to the company’s non distribution of profits,resulting in the loss of other shareholders.However,the judicial interpretation does not make clear the criteria for determining "abuse of shareholders’ rights",which also makes it difficult to apply Article 15 of the judicial interpretation(4)of the company law in judicial practice.There are different criteria for determining "abuse of shareholders’ rights",and it does not have the effect of protecting shareholders’ claim for abstract profit distribution.In addition to the introduction and conclusion,this paper includes the following five parts:Part I is “the definition of shareholders’ claim for abstract profit distribution”.This part introduces the concept and legal nature of shareholders’ claim for abstract profit distribution,as well as the legitimacy of judicial intervention in the protection of shareholders’ claim for abstract profit distribution.The shareholder’s claim for abstract profit distribution refers to the right to request the company’s profit distribution based on the company’s shareholder qualification without the resolution of the company’s shareholders’ meeting or without a specific distribution plan.The shareholder’s claim for abstract profit distribution is not only the inherent right of the shareholder,but also the expectant right.Judicial intervention in shareholders’ claim for abstract profit distribution is mainly due to the defects of corporate autonomy,capital majority principle and the requirement of the principle of prohibiting abuse of rights.Part Ⅱ is "the comment and Analysis on the principle of Article 15 of judicial interpretation(4)of company law".This part analyzes the Article 15,and holds that in principle,justice generally does not intervene in the company’s profit distribution matters.If shareholders want to remedy their own rights,they can mainly appeal to the court to cancel the profit distribution resolution or confirm the invalidity of the profit distribution resolution,request the judicial dissolution of the company and transfer shares However,there are some defects in these relief measures.Part Ⅲ is "comment and Analysis on the proviso of Article 15 of judicial interpretation(4)of company law".This part analyzes the proviso of judicial interpretation(4)of the company law,and holds that although the proviso provides a direct basis for the relief of shareholders’ claim for profit distribution,there are still many problems.For example,the proviso is vague,there is no clear standard of "abuse of shareholders’ rights",the distribution of burden of proof is inappropriate,and the judgment is lack of guidance.The biggest problem is that the standard of "abuse of shareholders’ rights" is not clear,which makes it difficult to apply.Part Ⅳ is "the status quo of judicial judgment on the identification of’abuse of shareholders’ rights ’of shareholders’ claim for abstract profit distribution".From the perspective of judicial practice,this part searches and combs the company’s earnings distribution cases from 2017 to 2020,and finds that the application of the proviso to Article 15 of the judicial interpretation(4)of the company law in the judicial judgment is relatively mechanical.Many courts reject the plaintiff’s claim on the ground that the plaintiff can not prove that he has abused the rights of shareholders,which makes it difficult for small and medium shareholders to provide evidence.However,in the few cases that support shareholders’ demands for profit distribution,the court’s criteria for "abusing shareholders’ rights" are inconsistent.In addition,in the judicial judgment,the substantive standard adopted in Article 15 of the judicial interpretation(4)of the company law and the formal standard adopted in Article 20 of the company law are not properly connected.Part Ⅴ is "to improve the standard of ’abusing shareholders’ rights’ of shareholders’ claim for abstract profit distribution".This part draws lessons from foreign experience,mainly including the principle of reasonable expectation in the United States,the fiduciary duty of controlling shareholders and the experience of French law,and holds that the identification of Article 15 "abuse of shareholders’ rights" in the judicial interpretation(4)of the company law of our country can adopt the method of combining formal standard and substantive standard.In terms of formal standard,according to Article 15 of judicial interpretation(4),"violation of legal provisions" can be regarded as the formal standard of "abuse of shareholders’ rights",and the law here should be understood in a broad sense.The substantive standard mainly from the perspective of protecting the interests of small and medium shareholders,regulating the behavior of large shareholders or controlling shareholders,and the company’s production and operation,puts forward three standards:introducing the principle of reasonable expectation,improving the provisions of shareholders’ fiduciary duty,and judging the company’s production and operation purpose.