Law Regulation On The Acts Of Controlling Shareholders In Related Party Transaction

Related party transaction (RPT) is the transaction between the listed company and related party. In the securities market of China, RPTS by listed company are unusually frequent and common. RPTS usually happen between specific subjects, which have controlling and affecting relevant relations. Lacking of supervision of law and system, the related party and listed company often distort terms of transaction in order to buck for some malfeasance interests, which results in unfair RPTS. These unfair RPTS will affect the interests of our country, minor stockholders, creditors and break the independence of listed company. Based on the studies of unfair RPT this article major reviews and analyzes how to establish a legal system to regulate the acts of controlling shareholders in RPTS, referring to the law regulation of different companies and areas.The fist part of this article comparative study the different definitions of related party and finds the legal features of related party. Part two introduces the definition of controlling shareholders and the relation between listed companies and its controlling holders, reviews the RPTS between listed companies and its controlling holders and the major representations of RPTS between listed companies and its controlling holders. Part three focus on the lavishing behaviors of controlling shareholders, analyze the root of these lavishing behaviors and the negative affection on the relative parities in related party transactions. As far as the status in quo of RPTS areconcerned, in combination with the regulatory experiences of overseas, part four put forward some suggestion that a legal liability system should be establish to regulate the related transactions acts of holding shareholders. The epilogue is the summarization of this dissertation.