Study On The Validation Element For Director's Affiliated Transaction

In affiliated transaction, the validation rule for transaction is one of the important rules to guarantee rights of involved parties. We may even say that, the primary problem in the law field of affiliated transaction is to make a proper judgment standard. It is a pity that there is still no system established. Through a comparative research and in consideration of the problems in current company law, the paper proposes suggestions to establish validation element for affiliated transaction as soon as possible.The paper is composed of four parts. The main contents are as follows:The first part of this paper mainly identifies the study subject. It principally analyzes the concept and characteristics of affiliated transaction. The study subject is limited to director, on the basis of the differentiation of director's affiliated transaction from that made by shareholders. Last, the study subject is narrowed down to the validation element for director's self-dealing transaction for the purpose to clarify the study area of affiliated transaction.The second part of this paper mainly analyses the application of affiliated transaction from contract law. Although affiliated transaction is in the judicial field, the nature of which still belongs to contract, so it is possible for its application to contract validation. The writer analyzes the validation application of contract invalidation and revocable situation in details.The third part is the core of this paper. Through the excerpts of the regulations about compulsory disclosure, approval and validation element of substantial fairness in British, U.S.A., Japan and French, the writer introduces the current situation of affiliated transaction in China and exposes the shortages of validation problems of affiliated transaction in current company law.In consideration of the shortages of validity elements for affiliated transaction, the writer proposes in the fourth part of the paper suggestions from legislative and judicial level. On the level of legislation, it is necessary to establish the legal status for disclosure, substantial fairness and approval validation element of disinterested director. On the judicial level, it is essential to exercise initiatives of justice to compensate the shortage of the standard system of affiliated transaction.In the last part, the writer gives a summary to elaborate the significance and values of the research and provides questions for future research.