Control On The Formation Of De Facto Groups Of Companies

Global legal issue as the protection for rights of small shareholders in a company is, the protection for rights of those in a subsidiary one goes further in difficulty. Domestic corporation law, regulating single companies, holds few norms on company groups, hence few systematic stipulations to protect rights of small shareholders in subsidiary companies. While making a lot of research on small shareholders' rights as well as the post protection for them and achieving outstanding results, academic circles pay little attention to the preventive protection for rights of small shareholders in subsidiary companies. This is the reason why the thesis approaches this subject by attempting to research the control on the formation of de facto groups of companies.In Part One, the thesis divides the formation of company group into three categories. It can be formed 1) as a result of government's arrangement; 2) by the means of contract taking a certain number of companies as its member and 3)by company making stock rights as their relevancy. The third one refers to de facto groups of companies in this thesis, which does not register and act in the name of "group".Part Two and Part Three analyzes the formation model of de facto groups of companies and the legal principle of the protection for small shareholders of subsidiary companies. De facto groups of companies can be formed, following 3models: 1) purchasing new companies; 2) investing in incorporation of new companies and; 3) splitting a company into new ones. This thesis focuses on the analysis of the possible formation of a company group through splitting, which is scarcely discussed by scholars, and expounds the current situation of the damage to small shareholders' nights and interests in subsidiary companies in China, then analyzes in detail the reason leading to the above damage from the point of law and the necessity of the protection for rights and interests of small shareholders of de facto groups of companies' subsidiary.Part Four, Fine and Six probe into the preventive protection for small shareholders of subsidiary companies. Part Four is about the protection for small shareholders of a target company during the process of creating de facto groups of companies by corporate takeover, including tender offer procurement and negotiated procurement. Part Five analyzes the protection for small shareholders in the course of forming de facto groups of companies through investing to incorporate new companies and takes as the main concern the legal liabilities of promoters, suspicious promoters, directors or supervisors in the process of incorporation, Part Six discusses the protection for small shareholders in de facto groups of companies' formation by the means of a company's splitting. It introduces the general procedure of a company's separation first, then, analyzes the possible damage small shareholders may suffer in the course of dividing, especially the damage to small shareholders who make no dissent and discusses the measures of protecting small shareholders' interests during the process of splitting.