| Related Party Transactions refer to the obligations and recourses instead of money transferred between related parties. It is a neutral economic concept, which unavoidable carries both merits and demerits. From the macro view, it can strengthen the comprehensive forces; enhance the centralization of the economic forces of the corporation to form the scale economy so that the whole economy can be promoted. From the micro view, it can optimize the inside recourses, and enhance the core competitive edges, increase the transaction chances, economize the costs and ensure the security of the transaction, maintain every advantage the corporation has. However, due to the inequality and specialty of the related parties and the obscurity of transactions, these transactions could be easily be used by some groups and individuals as a way to obtain illegal interests, which will possibly harm the corporation and the investors, the holders and the debtors, even the whole social economic system, for much state owned assets will be lost. With the increase of the modern economic cooperation, the related party transactions will inevitably influence all fields more. Therefore, it is urgent to make strict regulations on related party transactionsTo strengthen the legal regulations on related regulations and guide them is the best way to avoid demerits and make full use of the merits. By the compulsory disclosure of the related party transactions, the medium and small sized investors (or share holders) can get the same information as the main stock holders of related parties, so they can have the equal chance to make the choice to invest. That is to say, why the related party transactions should be regulated mostly is the protection of the investors besides the related parties. Second, to strengthen the supervision can ensure the equality and transparency of the market so that the confidence of the investors will be boosted, which is beneficial to the sustainable development of the market in the long term. Third, the regulation on the related transaction can prevent the unequal related transactions and the bogus disclosed information so that the price of the shares could reflect the authentic values of the shares, and the market could make the prompt and just response to any real and effective information, which is good to the optimization of the recourses.However, the current regulations on the related party transactions in China mainly belong to the administrative regulations, which enjoys low levels in the whole legal system. And all these regulations lack coherence and a set of principles and ideas, which guide the whole regulations. So it is inevitable for these regulations to conflict with each3other. Meanwhile the definition of the basic concepts and the design of the basic system and the establishment of the basic theory cannot be found yet till now. For example we can hardly find the definition of the related transactions and related party. Neither can we find the system of piercing the Corporate Veil or the fiduciary duty shouldered by the shareholders and the civil compensation system. The current Corporation Law lack the related propositions on the protection of the medium and small sized share holders and debtors as well as the system to restrict the right of controlling belonging to the share holders. Seldom could be found in Securities Law too. Exactly speaking, almost none. Therefore, the regulations on the related transactions mostly rely on the low-leveled government regulations most of which are provisional suggestion and answers, with the characteristic of changing too fast. So no stable and unified securities legislation has been formed on related transactions. As for the above-mentioned regulations, it is hard to put them into force for in reality, the current basic system and legal responsibility on related transactions are short of civil responsibility of compensation system and efficient supervision on the disclosed information, all of which affect the equality of the market and the co...
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