A Study Of Shareholders' Action

The creation of company system is an epoch-making event in the human history. Up until today, companies have become people's favorite means of investment, attracting many enthusiastic and earnest investors. The soul of company system lies in its independent company personality and shareholder's limited liability. Shareholders invest in the company, by means of property transference in exchange of meaningful equities, which function as the sole ties linking themselves with the company. Complicated as the company practice is, it is not uncommon for the legal equity interests to be damaged, and things are getting worse. Protecting the interests of shareholders, especially small and medium ones, appears to be a prominent and urgent issue. It has become an eternal objective for jurists and lawmakers worldwide to build up a sound system to protect shareholder's equity interest. By studying the company legislation in every modern developed country, we can see that all companies have endowed their shareholders with abundant equity interests, whose fulfillment are ensured by the establishment of a judicial relief means--- Share holder's Action regime. According to the verified purposes of law suiting, shareholder action system comprises shareholder direct action and shareholder derivative action. Shareholder direct action means that when a shareholder's equity interests are directly damaged by the illegal actions of the company, other shareholders, company director and other high-ranking officials , the shareholder goes directly to the people's court to file suits in his or her own name. Shareholder derivative action is a special kind of suit, referring to the fact that when the lawful rights and interests of companies are damaged, and that the company is slack or refuses to seek the legal action against the relevant individuals, the shareholder files suits against the person liable in his own name, and the out coming benefits belong to the company. These two types of shareholder action, working together, constitute a formidable rampart preventing the equity interests from existing nominally. The Company Law of People's Republic of China, ratified on Oct.27th, 2005 in the 18th Session of the 10th People's National Congress, clearly stated the shareholder direct action and derivative action, whose fulfillment in practice would be hereby ensured. The 2005 edition Company Law modified and improved some relevant regulations depicted in the 1994 Company Law, reinforced the practicability of shareholder action articles, highlighted the lawmakers'resolution to protect the legal equity interests of shareholders, especially small and medium ones, and practiced the pursuit of substantial equality in shareholders. Compared to the 1994 Company Law, the 2005 edition has made considerable progress; but problems and limitation still exist; for instance, in designing the shareholder direct action, cause of action is relatively narrow, lawsuit main body qualification needs to be further identified, and regulations and procedures like actual effect require to be specified.. As far as the shareholder derivative action is concerned, the structure of action body needs to be perfected; the incentive and constraint mechanism also leave to be balanced. Things like this all require the company legists and lawmakers to conduct deep thinking and review of their practice, continuously making improvement to our country's shareholder action.Based on the specific regulations of establishing the shareholder action in 2006 Company Law, and on the research and comparative study over foreign shareholder action, this dissertation, by using history analysis, comparative analysis, Value Analysis, economic analysis, and other analytical methods, studies the constant problems existing in the current shareholder action theory and practice, and puts forward some proposals as to its soundness and improvement. This dissertation consists four chapters, as follows:Chapter one is about the legal analysis of shareholder action category and value. This chapter comprises three sections, in which the first section provides clarification of relevant definitions in shareholder action. Based on the systematic expounding of the shareholder action definition and features, this dissertation compares shareholder action with other similar concepts, aiming to further explain the connotation and extension of shareholder action. The second section probes into the legal theory of shareholder action, and revealed the theoretical basis and the systematic foundation. Through the introduction and analysis of shareholder action theory, company personality theory, and the principle of capital majority, this part demonstrates the justness of shareholder action. The third section makes argumentation about the value shareholder action, and put forward the value concepts like balance between efficiency and justice, monocracy and self-rule, security and freedom, in an attempt to chart the course for the future company lawmaking.Chapter two focuses on shareholder direct action: proof of foreign law and typification analysis. This chapter comprises three parts. Part one analyses the shareholder direct action's connotation and features, clarifies the significance of its existence, based on which the justice of shareholder direct action is proved. The second part conducts necessary review and analysis over foreign law, which laid a solid foundation for modifying the company law in our own country., relying on the 2006 Company Law, and abiding by the different types of shareholder direct action, including legal litigation of the Company Resolution, litigation of Shareholders' Right to Know, litigation of corporate deadlock, and Equity litigation of Compensation for Damage, The last part makes systematic and substantial study on the legal principles and rules regarding cause of action, lawsuit main body, actual effect and security in litigation.Chapter three talks about shareholder derivative action: litigation structure analysis. This chapter consists three sections. Section one, similar to the description of shareholder direct action in chapter one, fully demonstrates the significance of the establishing shareholder derivative action, on the basis of substantial study of shareholder action connotation and features. The second part adequately reviews the legal origin of the shareholder derivative action in foreign countries, and makes differentiation and analysis of the corresponding mechanism, which provides a system repertoire of foreign law that is essential for the improving the shareholder derivative action in our country. The third part, by reviewing and analyzing the structure of shareholder derivative action, makes clear the body structure of litigation, and demonstrates the justice of incentive and restricting mechanism.Chapter four describes the reconstruction of shareholder action: improvement and perfection. This chapter is consisted of two parts, in which the first section is about the improvement and perfection of shareholder direct action, mainly guided by the shareholder direct action prescribed in the 2006 company law. Proposal put forward in this part include the enhancement of company resolution litigation, litigation of shareholder right to know, litigation of company deadlock, and the litigation of damaged equity interests. The second part focuses on the improvement of shareholder derivative action, aiming at the perfection of litigation main body structure, incentive and constraint mechanism depicted in the current Company Law.