Recognition Criteria For Non-fair Connected Transactions Of Limited Liability Companies

Related party transactions are a special type of transaction behavior in commercial activities,with a dual nature.Generally,the law only prohibits unfair related party transactions.At present,the regulations on related party transactions in China are mainly focused on listed companies,and the relevant regulations are relatively complete.With the development and growth of limited liability companies,the related party transaction issues they face are also very prominent.However,the closed nature and human cooperation characteristics of limited liability companies make it difficult to achieve effective procedural review.Therefore,it is necessary to analyze its particularity and construct a comprehensive identification standard.The main body of the paper is divided into the following three parts:The first part explains the basic theory of identifying non fair related party transactions of limited liability companies.Firstly,define the concept of non fair related party transactions from the perspectives of related parties,transactions,and fair recognition standards;Secondly,analyze the particularity of determining the fairness of related party transactions of limited liability companies;Finally,by reviewing the provisions of China’s laws and regulations on the recognition of unfair related party transactions,it is clarified that the Company Law is the basic law for regulating related party transactions,but the relevant provisions are not perfect.The second part selects cases of related party transactions of limited liability companies to analyze the problems and reasons that exist when determining unfair related party transactions in judicial judgments.Firstly,there are different ways of identifying related party transactions,with some of the identification ideas deviating from relevant legal provisions;Secondly,some judgments are subject to procedural review,but the determination results are based on substantive review and do not reflect the value of procedural fairness;Finally,substantive examination lacks specific standards and often uses "fair price" to determine the fairness of related party transactions,developing some more specific judgment viewpoints,but no unified standard has been formed.The third part is to improve the recognition standards for non fair related party transactions of limited liability companies.Based on the provisions of the first and second drafts of the revised company law,suggestions for improvement have been put forward.Firstly,include shareholders in the scope of affiliated identity.Secondly,refine the procedural review standards for the fairness of related party transactions,establish a unified information disclosure system,provide general approval procedures,and exclude the voting rights of related directors and shareholders,but should not exclude the voting rights of related shareholders of limited liability companies.Once again,establish the "objective fairness standard" and "complete fairness standard" as the substantive review standards for the fairness of related party transactions.Finally,it is presumed that related party transactions are fair after fulfilling legal procedures.When the relevant rights holders file a lawsuit,they should prove the unfairness of the related party transactions,and the "objective fairness standard" should be used for substantive review.However,for limited liability companies that have already fulfilled legal procedures,the "complete fairness standard" should be used for substantive review of related party transactions;For related party transactions that have not fulfilled legal procedures,when the relevant rights holder brings a lawsuit,the related party should prove the fairness of the related party transaction,and the substantive review should adopt the "completely fair standard".