A Study On The Non-contentious Procedure Of Corporate Disputes

In the dualistic legal theories of civil procedure, as the counterpart to contentious procedure, non-contentious procedure is a judicial relief for the corporate disputes. Compared with contentious procedure, non-contentious procedure inherently advantages in solving certain types of corporate disputes as it featured in several aspects such as more discretion vested in judges, efficiency and simplicity in solving corporate disputes, etc., especially in the circumstance of failure of the mechanism of the corporate governance where the judicial power may be exerted through the non-contentious procedure to solve the disputes in a timely manner for avoidance of escalation of further disputes, this is the core value of the non-contentious procedure. However, the current legislation status which only allows one type of non-contentious procedure does not accommodate the needs of corporate activities in China, causing serious defects such as unreasonably high litigation costs for the parties, inadequate of judicial reliefs and waste of judicial resources, etc. In this regard, the article analyzes and studies on the key issues of corporate non-contentious procedure and aims to provide some suggestions for the improvement of corporate non-contentious procedure in China. The article consists of five chapters.Chapter 1, the general principles of corporate non-contentious procedure. The chapter starts with the definitions and features of non-contentious procedure and non-contentious case as well as the rationale of the alternative application of non-contentious procedure and contentious procedure. Based on these, the chapter defines the"corporate non-contentious procedure"and analyzes its value orientation, then discuss its connections with the corporate governance. By comparative analyzing the different expressions of non-contentious procedure, the article agrees with the expression of"corporate non-contentious procedure"for its simplicity and concise. From the perspectives of civil procedure and the mechanism for the dispute resolution of corporate matters, the chapter also defines the concept of"corporate non-contentious procedure", which is the application of non-contentious procedure in the context of Company Law, i.e. the non-contentious procedure is the non litigation procedure employed by the related parties, in order to protect their rights, achieve their profits, to file petition to the court for non-substantive civil disputes or other non contesting corporate disputes. The corporate non-contentious procedure reflects the direct involvement of state power to the internal corporate matter through the judicial system. The procedure stresses on the value of convenience and efficiency yet also inherently inadequate in the strength of procedural protections offered to the parties to the disputes. Therefore, a balance between the freedom and order, justice and efficiency shall be achieved while emphasizing on the state power's interventions and the value of efficiency. The corporate non-contentious procedure is an effective external mechanism in the circumstance of failure of the mechanism of corporate governance. Nevertheless, when the judicial power is exerted, a clear boundary should be drawn to ensure the principle of autonomy of a company.Chapter 2, the scope of application of corporate non-contentious procedure. The non-contentious procedure has the advantages of efficiency yet also with the deficiency in procedural protection. Both theoretical analysis and feasibility study on the practices should be conducted to properly determine the applicable scope of non-contentious procedure so as to mitigate the adverse effect thereof and balance the value of justice and efficiency of the procedure. As to the categorization criteria of the corporate non-contentious procedure, it includes criteria in appearance and criteria in substance. The criteria in appearance is in accordance with"positive law"while the criteria in substance is determined by the nature of case in light of the value of efficiency. Categorized by its object, the corporate litigation case handles the disputes arising from the substantive matters such as the rights set out in the Company Law between the parties; the corporate non-contentious procedure applies to the cases where the parties petition the court regarding the non-substantive civil disputes or other corporate matters which is not contesting to confirm certain facts which will consequently affect, change or extinguish certain corporate legal relationships. Furthermore, the chapter also analyzes the features and categories of the corporate non-contentious procedure.Chapter 3, the study on the typical corporate non-contentious cases. After analyzing the different theories by Chinese scholars currently existing, the article is in the view that, in the context of the PRC Company Law, there are five categories of typical corporate disputes may be solved under the corporate non-contentious procedure, namely, cases involving the shareholders'right of information, the convening of the shareholders'meeting, the election of directors as well as the dissenting shareholders'rights of demanding for shares redemption, and the cases related to companies'mandatory liquidations which have been clearly stipulated by the PRC laws as a"non-contentious procedure". The article studies these cases by employing the method of comparative law and introduces the current status of the judicial relief. The nature of the aforesaid cases conforms to the non-contentious procedure. It is in the parties'best interests to employ non-contentious procedure for such cases.Chapter 4, the analysis of the current legislation on corporate non-contentious procedure in China. The chapter introduces the legislation of non-contentious procedure from the perspective of Civil Procedural Law and considers the legislation of corporate non-contentious procedure from the perspective of Company Law. The chapter focus on the background of establishing the company's mandatory liquidation system and comments on the mandatory liquidation system, pointing out the weakness of the same. The chapter also made reflections on the fact that only one type of case is expressly stipulated as"non-contentious procedure case"in the PRC laws. In practice, some corporate disputes were denied for case acceptance before the court, the judicial relief is ineffective and the corporate governance lacks of effective remedies. A large number of corporate disputes which should have been solved under non-contentious procedure were inappropriately handled under contentious procedure, causing serious defects such as unreasonably high litigation costs for the parties and waste of judicial resources, etc. Hence, it is necessary to expand the applicable scope of non-contentious procedure and improve the corporate non-contentious procedure.Chapter 5, the perfection of Chinese corporate non-contentious procedure. In light of the oversea experiences in legislation and take Chinese reality into account, the chapter summarizes several ways for improving the corporate non-contentious procedure: firstly, amending the general principle of non-contentious procedure in the PRC Civil Procedure Law; secondly, amending the non-contentious types of cases, specific rules related to corporate non-contentious procedure in the PRC Company Law. The applicable scope of corporate non-contentious procedure should be gradually expanded, such as considering incorporate the shareholders'right of information in to the non-contentious procedure. To ensure the legitimacy of corporate non-contentious procedure, the legislative authorities may consider the judicial review of civil law system and establish the judicial review system for civil procedure in China as the correction mechanism provided for non-contentious procedure.