| Actual controllers are important "malicious role" in capital market. Every move that they make constantly involved the nerve of large investors. They are not controlling shareholders, but they are the actual owner of corporate control. Though not sample stage, but they are the driving force hiding behind shareholders to manipulate the company’s fate, and put forward new topic to the legal issues research of corporate governance. The relationship between actual controller and numerous stakeholders has transcended traditional single company’s internal principal-agent relationship. The behavior of actual controller exerted great influence on the interests of stakeholders, such as company, shareholders, creditors, broad investors and so on. It often appears the phenomenon that the actual controller damaged the stakeholders, such as the company, shareholders, creditors, broad investors and so on. However, the legal norms of China’s company law are very rough on the actual controller, and urgently need to strengthen the research if the legal system on the actual controller, which to provide the reference to the improvement and perfection of our legal system on the actual controller.In addition to preface and conclusion, this paper is divided into five parts.Chapter 1:The definition of actual controller and control. This chapter defined the control of company, analyzed and explained the control of company from the angle of economics and law. On the basis of the analysis of the current legislation and legal theory viewpoint, this paper sorts out the basic connotation of corporate control. This paper argues that the behavior of corporate domination is the key of the definition of company’s control. The so-called corporate control shall refer to the status that the actual controller, the controlling shareholders, directors and executives can actually control company’s behavior by their owned power, and the actual control and impact of company’s behavior. This article explained the control from several classical economics theories, which think that the control not only is the core function element of organization authority or administrative coordination mechanism in Coase’s eyes, but also the adopted measures and system design for solving agency problems in agency theory, in addition is the key of the corporate ownership allocation in the theory of enterprise ownership arrangement. From law theoretically, the generation of company’s control is based on the corporate personality, shareholders’ rights, interests conflicts and corporate governance. The essence of company’s control is the decision-making power and the right of discourse on corporate behaviors, and the most efficiency way is to allocate these to shareholders. Then, this paper defined the connotation of actual controller, and made a comparative study of company’s normal control and actual controller’s excessive control. After discussion of the definition, the actual controller that this paper defined is the person who can actually control the company through investment relations, agreements or any other arrangement, in addition to the controlling shareholder. After the comparative study of actual controller’s excessive control and company’s normal control, this paper argues that the excessive control of actual controller essentially is the destruction of the normal control system and the infringement of company’s independence, and actually is the alienation of the normal control.Chapter 2:Motivation of actual controller and typological research. This chapter firstly analyzed the motivation of actual controller, applying transaction cost theory and private gains control theory. Then it made a typological research on actual controller with three different standards of basic legal relationship, controlling behavior and controlling level. From the theory of transaction costs, actual controller formed the pyramid controlling relations layer upon layer through company groups, network, and strategic alliance and so on. The basic motive is the expansion of corporate peculiar advantage in company control network through the form of internalization, to reduce transaction costs, and get higher control gains than a single company control. Judging from private gains control theory, the actual controller’s motive lies in the pursuit and grab of the excess private gains of control. This paper argues that typification of actual controller is the foundation in legislation and judicial practice. Actual controller can be divided into actual controller of investment relationship, actual controller of agreement relationship and actual controller of other relations with the basic legal relations as standard. According to the way of actual controller’s behavior, actual controller can be divided into the actual controller in the controlling shareholder status, the actual controller in the director status and the actual controller in executive status. From the classification of actual controller’s level placed, actual controller can be divided into middle actual control and ultimate actual controller.Chapter 3:The general obligations of the actual controller. This chapter firstly argued that the actual controller being fiduciary obligor is result from traditional fiduciary obligor’s range expansion, and then put forward the dynamic applicability rules about actual controller’s fiduciary obligations, according to the actual controller’s legal status in the implementation of control behavior, finally thoroughly discussed the contents of actual controller’s fiduciary obligation. This paper argued that the range of traditional fiduciary obligator include directors, executives and supervisors in our company law. This paper puts forward the basic rules of actual controller’s fiduciary obligations, namely the content of actual controller’s fiduciary obligation should be dynamically adjusted according to their legal status in the company. If the actual controller in the position of negative actual controller, he shall be mainly liable for information disclosure obligation and respect the obligation of the independence. If the actual controller in the position of active actual controller, according to the status of controlling shareholder or director or executive, he also shall be liable for the controlling shareholder’s duty of care and faithful obligations or director’s and executive’s duty of care and faithful obligations based on the negative actual controller’s obligations. This paper argued that the actual controller should also undertake the obligation of information disclosure, the obligation of respecting company’s independence, duty of care and duty of loyalty.Chapter 4:The obligations of actual controller in the control trading. This chapter firstly analyzed historical development of company’s control trading in our country, and then studied the actual controller’s obligations in the current popular pattern and way of control trading.In addition to the traditional controlling stake acquisitions, the current popular models of control trading are whole appears on the market, spin-off listed and directional seasoned, etc, though these three kinds of control trading model does not necessarily result in the transfer of control, but must be able to significantly impact the ownership structure, therefore, this chapter focused on actual controller’s obligations in whole appears on the market, the obligations in spin-off listed and the obligations in directional seasoned. In the whole appears on the market, the actual controller have the obligation to strengthen information disclosure, to prevent harm to investors caused by information asymmetry; have the obligation to ensure the quality of listed companies, inferior assets will not be injected into the company; have the obligation to be objectivity and justice, fair and open in assets evaluation, pricing, etc; have the obligation to protect the interests of small and medium shareholders and objection shareholders; have an obligation to deal with formalities of assets delivering on time and guarantee the safety and integrity of assets before assets delivering.In the spin-off listed, the actual controller accountability shall not engage in interest, and shall not make listed subsidiary transport money tool; be circle not too high valuations, may manufacture asset bubble; to protect the benefit of the parent company and other stakeholders. In actual control of directional growth, the actual controller have obligations that shall not packing inferior asset injecting into a listed company, not to overvalued the value of injected asset, impairing interests of listed company; not to manipulate shares or manipulate shares in disguised form.Chapter 5:The responsibility of actual controller. This chapter firstly discussed the constitutive requirements of actual controller’s violations fiduciary responsibility, then studied the form of actual controller’s violations fiduciary responsibility, finally studied the investigation of actual controller’s shareholder’s action, actual controller’s judicial cognizance, the censorship standards of violation of faith obligation and the application of disregarding of corporation personality. The constituents of actual controller’s violations fiduciary responsibility include:illegal behavior, subjective fault, injury consequence and causality. In our company law, there are only damage compensation and disgorgement exercised by corporation on default fiduciary responsibility, and the company law should increased court ban as the liability form as soon as possible to stop the infringement. The court should accept the case that shareholders submit the derivative action to the court for inquisition the actual controller’s violations fiduciary responsibility. The determination of the actual controller should firstly examine the controlling relationship to review that actual controller’s control of company is based on investment relations or agreement relations or any other legal relationship. In the meantime, it should review that the actual controller is middle controller or ultimate controller; After that, the court should also to examine actual controller’s control behaviour and determine the actual controller is negative actual controller, or positive actual controller, and further define that positive actual controller is based on the status of controlling shareholder or based on the status of director and executive. In the examination of violation of information disclosure obligations, the court shall examine the actual controller whether disclose their basic situation, whether to establish internal system of relevant information disclosure, whether to disclosed significant information promptly. In the examination of violation of the obligation to respect the company independent, the court shall examine whether the actual controller influence the equity structure of company’s assets, whether to ensure the independence of the corporate personnel, institution, financial and business. The examination of violations of faithful obligations need draw lessons from the practice of American law; establish the substantial fair examination standard of interest conflicts trade. Because of lacking the detailed regulations of duty of care, our company law should establish the evaluation criteria of the duty of care as soon as possible, and the American business judgment rules worth to learn. Whether the system of company personality disregard is applicable to actual controlling, this paper argues that the actual controller misusing company personality and shareholder’s limited liability, seriously impair interests of creditors, the court can ordered the actual controller and associated companies involved including parent companies, subsidiary companies and brother companies are jointly liable to the company’s debts, and directly to pay the creditors.The innovations of this paper are:First, from the angle of behavior, this paper defined the control as the behavior, which has already started when company is established, and the subject of right can actually control the company through investment relations, agreements or any other arrangement, in addition to the controlling shareholder.Second, comparing the normal control system of corporation, the actual controller’s excessive control ruled on company is the alienation of company’s control. It should strengthen the regulation of law.Third, according to the way of actual controller’s behavior, this paper divided the actual controller into three kinds:the actual controller in the controlling shareholder status, the actual controller in the director status and the actual controller in executive status, established theoretical support for judicial recognition of actual controller’s behaviour properties and application to the compulsory norms of controlling shareholder, director and executive.Fourth, actual controller’s fiduciary obligations are resulted from traditional fiduciary obligor’s range expansion. The actual controller should undertake the obligation of information disclosure, the obligation of respecting company’s independence, duty of care and duty of loyalty. The key point is that the company law should establish the dynamic applicability rules about actual controller’s fiduciary obligations, and apply to the compulsory norms of controlling shareholder, director and executive based on the properties of actual controller’s behaviour.Fifth, in addition to damages and disgorgement exercised by corporation, the form of actual controller’s violations fiduciary responsibility should add the court injunction. The court should accept the case that shareholders submit the derivative action to the court for inquisition the actual controller’s violations fiduciary responsibility. To the conflicts of interest transaction, company law should add the standard of fair trade, and perfect the compulsory norms of duty to care.Sixth, drafting the proposed provisions of "Company Law". Modifying the two hundred and seventeenth clause (c) of "Company Law" to:"the actual controller who is through investment relations, agreements or other arrangements to govern corporate behaviour except the actual controlling shareholder."Modifying the one hundred and forty eighth clause of "Company Law" to:"Directors, Supervisors and Senior Management as well as any person in that position would abided by laws, administrative regulations and articles of association of the company bear the duty of loyalty and diligence obligations. Directors, supervisors and senior management personnel and any other person in that position cannot accept bribes, other illegal income and occupation of the company’s property. "Modifying the one hundred and forty ninth clause of "Company Law" to:"Directors, Senior Management and any person in that position cannot do any of the following acts..." (Text omitted the clause of "Company Law" the same as the original texts)Modifying the one hundred and fifty clause of "Company Law" to:"Directors, Supervisors and Senior Management as well as any person in the position of executive company violates laws, administrative regulations or the articles of association, cause losses to the company, be liable for damages. "Modifying the one hundred and fifty three clause of "Company Law" to:"Directors, Senior Management and any person in the same position who violates the laws, administrative regulations or the articles of association, damage the interests of shareholders, the shareholders have the right to sue through People’s Court. "... |
PDF Full Text Request