Research On The Identification Of “Improper Purpose” In The Shareholders’ Inspection Right

The right to know is a fundamental right enjoyed by shareholders in accordance with the law,among which the right to check their company’s accounting books is an important way to realize the right to know.The law protects the interests of shareholders by granting them the right to inspect their company’s accounting books,but this protection is necessarily not borderless and unlimited.The company law stipulates that the premise of shareholders fulfil their right to know is that the purpose of the shareholders’ inspection is legitimate.When shareholders have "improper purposes",companies can refuse shareholders to exercise their right of inspection.There is only a general description of "improper purposes" in article 33 of our country’s "Company Law".Since there is no clear identification standard of "improper purposes",judicial adjudication has fallen into a dilemma of inconsistency and ambiguity.Until the "Provisions of Supreme People’s Court on Several Issues Relating to Application of the Company Law of the People’s Republic of China（IV）" was promulgated,Article 8 stipulated three situations in which shareholders exercised the right of inspection with improper purposes through the method of enumeration,and set up a catch-all clause.These clauses make up for the deficiencies of application in judicial practice to a certain extent,but there are still many disputes and problems that need to be discussed and resolved.This article focuses on Article 8 of the "Provisions of Supreme People’s Court on Several Issues Relating to Application of the Company Law of the People’s Republic of China（IV）",studies the problems existing in the identification of "improper purposess" in judicial practice,and based on the judicial position and theoretical analysis the conditions for the identification of "unjustified purposes" has been reflected and measured.First,the first part of this article gives a brief overview of the "improper purposes" in the shareholder’s right of inspection.And then analyzes the origin and theoretical basis of taking "improper purposes" as a restrictive condition for shareholders to exercise the right of inspection by interpreting the connotation of the clause,and then realizes that the essence of the "improper purposes" rule is the balance between shareholders’ rights and company interests.Then,by sorting out and summarizing the cases involving the identification of "improper purposess" in China’s judicial practice,analyzes the general situation of judicial practice of the identification of shareholders’ improper purpose.Secondly,the second part to the fourth part of this article carry out a detailed analysis of the situations listed in the judicial interpretation.On the basis of the previous empirical research,the problems existing in judicial practice are discussed in combination with cases.And analyzed the focus issues from the aspects of defining key concepts,identifying standards and identifying effects.This paper also puts forward some reflections on the specific rules for perfecting the identification of "improper purposes",mainly reflected in the following contents.First,the criteria for identifying "substantial competition" are different.Some courts only use the overlapping or the same business scope as the criterion for determining the substantive competition relationship,and there is a certain deviation.The court should strictly grasp the substantive determination standards,accurately judge the company’s main business,and comprehensively consider the relevant market conditions such as product types,business areas,and customer groups.Second,there is a lack of clear identification standards in the case of "shareholders’ disclosure of information to others may result in harm to the interests of the company",and the company is difficult to provide evidence,which often requires the discretion of judges.Therefore,this paper puts forward some thoughts on the improvement path of the identification standards based on the current judicial practice.Third,it is unreasonable to directly presume that the purpose of the current access behavior is improper because the shareholder has notified the information to others,and the company rarely raises this defense in judicial practice,it is recommended to delete this clause when the law is revised.Fourth,the identification of other improper purpose circumstances lacks directionality,and the identification of non-enumerated circumstances is very cautious in practice,the catch-all clause should be further refined to provide guidance for the identification of other improper purposes.Fifth,this part analyzes the determination of the situation of "shareholders with multiple purposes".In practice,the court should draw lessons from the experience of extraterritorial law,make a reasonable distinction between the multiple purposes of shareholders exercising the right of inspection,and should pay attention to the review of the legitimate purpose while identifying the improper purpose,and allow them to exercise the right of inspection within the scope corresponding to the legitimate purpose.Finally,the burden of proof in the determination of "improper purpose" is solely assigned to the company.The shareholders usually only need to state the purpose of the inspection,leaving the company with an excessive burden of proof.The burden of proof on both the shareholders and the company should be allocated reasonably,and shareholders should also bear the corresponding burden of proof for the purpose of inspection under certain circumstances.