Studies On Corporation's Participation In Shareholder's Derivative Action

Abstract:As an special system design, shareholder's derivative action has more difference from common civil action in such as the attribute of litigation right, design of lawsuit procedure, the universality and complexity of interest subjects involved, and so on. The main original intentions of it are to protect small shareholders' interests, strengthen corporation's litigation participate seems inconsistently, but that's not true. Actually, corporation lies in the core of the associated interest subjects. Corporation's litigation participate is the crucial factor not only for whether shareholder's derivative action system works well or not, but also for the design of interest equilibrium mechanism. Corporation's parts in shareholder's derivative action are ambivalent and complicated, and corporation perhaps becomes of primary beneficiary as well as maximal victim in shareholder's derivative action. It is necessary to strengthen corporation's function and provide it the chances to impose on the procedure and result of shareholder's derivative so that corporation could bring into play an adjustable and balanceable function. By using the related theories and methodology of corporation law, civil procedural law, civil law and economic analysis of law comprehensively, this paper has given a systemic and in-depth analysis on the problem of corporation's litigation participation on basis of the developmental status quo of our shareholder's derivative action system, the protection of shareholders'right, related systems of civil litigation and corporate governance mechanism.This paper is divided into six chapters besides introduction and epilogue. They are as follows: Chapter One:Quality of Litigation Right of Shareholder's Derivative ActionShareholders'right doctrines have some constructional deficiencies. By using the methodology of economic analysis of law on basis of contract theory of corporation, it's not difficult to find out that the entity law foundation of shareholder's derivative of litigation right was based on the breach of director or other high-level corporation governor's contract obligations. Furthermore, the economic principles about why only shareholder could hold the right and the corporation law set up preceding procedure for shareholder's litigation was opened out. Namely, these system arrangements could reduce the transaction cost and promote the effective utilization of social resources. Shareholder's derivative action system is charged with the functions of aforehand supervision and posterior remedy. Its procedural law foundation is litigation entrusting.Chapter Two:Corporation's Participation in Shareholder's Derivative ActionThis chapter explains that corporation's participation accords with the requests of due procedure theory, litigant efficiency merit and quality of litigation right of shareholder's derivative action. The corporation has the right to choose whether participate the lawsuit or not, but it shouldn't select to assist the defendant and replace the plaintiff shareholder to institute new lawsuit. It's necessary to provide an apprizing procedure for corporation's participation.Chapter Two:Corporation's Litigation StatusBy doctrinal analyzing the related viewpoints of domestic academe, this chapter explains that the corporation should be regard as joinder participant in principle, as third party without independent claims exceptionally on basis of the experiential reviews on overseas legislation experiences.Chapter Four:Corporation's Rights in Shareholder's Derivative ActionFirstly, this chapter explains that the corporation should have the right to prevent some shareholder's derivative actions conditionally. It's necessary to reform our existing directorate and supervisory board systems and ensure the independence of correlative judgments. The court should respect the independent decisions. We need introduce into business judgment rule in order to guarantee the right's realization. Secondly, the corporation should have demurrer right for the procedure and result of litigation reconciliation, but it's not appropriate to permit it to reconcile with the defendant solely. Thirdly, the corporation has the right to claim the plaintiff shareholder who loses a lawsuit clearly without institute basis to compensate for his direct damages because of the false lawsuit. Lastly, the corporation should also be endowed the claim right to re-try, execute, and etc.Chapter Five:Corporation's Obligations in Shareholder's Derivative ActionFirstly, this chapter analyses that the corporation should compensate the recover plaintiff shareholder for his reasonable expenses because of the action based on the theory of negotiorum gestio, and the unsuccessful plaintiff shareholder also could gain reasonably compensation conditionally. But it's not proper to establish the system of shareholders'direct compensation. Secondly, res judicata of the lawsuit is expanded to the corporation based on statutory litigation entrusting, but the litigation reconciliation hasn't res judicata. Lastly, the corporation should also be charged with the obligations of evidence providing, reasons explaining for not'instituting action, and so on.Chapter Six:Interest Equilibrium in Shareholder's Derivative ActionFirstly, it's important to strengthen the corporation's status and functions because it accorded with the merits seeking of corporation law and the quality of litigation right of shareholder's derivative action. That would be propitious to protect the interrelated subjects'interests evenly and improve on the other protection mechanism of shareholders'rights. Secondly, the inspiriting and inhibiting mechanisms of shareholders'claim need to be established. Thirdly, viewing from economic analysis of law, business judgment rule could abate the defendant director's obligations reasonably, that is propitious to reduce the transaction costs and promote the effective utilization of social resources. Lastly, it's indispensable to expand the judge's power of discretion in order to make the interest equilibrium mechanisms of shareholder's derivative action function effectively.