The Perfection Of Mechanisms In The Shareholders' Derivation

The shareholder derivative action refers to a system of action which the shareholders of legal requirement can commence on their own name against the infringe for the interests of corporation when the interests of corporation are infringed by the majority shareholders,directors,supervisors and other senior managers but the corporation refuses or fails to invoke the right to suit. As the foundation of corporation governance, the absolute implement of the rules of capital majority and eligible plaintiff could cause the corporation was controlled completely by the majority shareholders and the minority shareholders are virtually deprived of the way to sue. And after 19th century, the board of directors and management gradually holded the power of the corporation from the shareholders meeting. Then the right of minority shareholders was infringed more and more by the interior of the corporation, including directors and senior managers. So how to protect the legal benefit of the minority shareholders was becoming more and more an outstanding social problem and was influencing the advantage of corporation system to play.By granting the shareholders of legal capacity to commence the action on their own name in special circumstances, the shareholder derivative action could effectively restrict the action of the majority shareholders to protect the legal benefit of the minority shareholders. But according to the analysis of the Article 152 in the revised Company Law, in one side , the requirement for the plaintiff shareholder to initiate the action and front procedures is not reasonable enough. In the other side, there are no related systems, such as litigation security, litigation settlement. So this article will gives some suggestions on the development of the shareholder derivative action in China for the faultiness of our current regulations, based on the principle of collaboration between corporation autonomy and government interference, encourage of proper actions and prevention of hostile actions ,and the study of advanced experience in other countries of the world.