Studies On Fiduciary Duty Of Controlling Shareholder Of Targeted Corporation In M&A

M&A is the behavior that affects the asset and the stock structure of the corporation and emphasize on the shift of corporate control. But during the early period of M&A, the directors and managers hold all the activities and shareholders just stand by passively. The directors from Target Corporation always make the recommendation of being merged because of the higher compensation or the acceptance to be the director in the new corporation by the purchase corporation. The effect of the shareholders is limited and they just collect to approve the decisions of the board of the board of directors. Of course the shareholders an also refuse to sale the stock and then they would become the minority shareholders in the new corporation. So in the field of M&A, And even among the shareholders ,there also exist the controlling shareholders and because of the quantity of share and the peculiar position they hold, the controlling shareholders play the critical role in the shift of corporate control. So in the process of corporation M&A, How to establish the system of duties of controlling shareholder and directors has become the important part in the M&A legislation of the countries, In this dissertation, the author makes analysis on the judgment and legislation of America and England ect. On the basis of understanding the essence of M&A.Besides lead-in and conclusion, the dissertation contains four chapters. Chapter One discusses the establishment of the fiduciary duty for the control shareholder of targeted corporation. In this chapter, the author analyzes the law definition of controlling shareholder. The general theory on fiduciary and fiduciary duty of controlling shareholder. The general theory on fiduciary duty of controlling shareholder is introduced. Controlling shareholder of joint-stock company has direct or indirect controlling power to the msnagement or other important things of the company, because of its more share or other reasons. This text adopts both essential standard and formal standard to define the Controlling shareholder. As far as shareholder's occupying definitely or relativelymajority on the proportion of stock right, form status of controlling, can control the meaning institution of the company, we can judge that he is a controlling shareholder. This article objects to regard the enforcement of controlling power as a composition of the controlling shareholder. The fiduciary duty of controlling shareholder originates from the US Supreme Court Southern Pacific Co in 1919 in free. v. Bogert case, and is accepted by our country's educational circles and stock supervisory committee progressively. The fiduciary duty of controlling shareholder is corresponding to the power of controlling. The fiduciary duty of controlling shareholder includes faithful duty and the duty of care.The second part of this article discusses the basis of jurisprudence in the portection of shareholder's rights. The auther analysis the shareholders especially the minority shareholders inferior position according to the conflict between shareholder's righter. The duty establishment has gotten very strongly theoretical foundation of law philosophy, civil law and company law.The third part analysis the construction of fiduciary duty of controlling shareholder in our country. Analysis from the angle of the necessity, rationality, feasibility to construct the fiduciary duty theory, and puts forward how to judge the controlling shareholders violate the their fiduciary duty. These standards include: "swindle"standard, "commercial affairs judge rule", "legal procedure "standard, and "interests is damaged"standard. The abuse of controlling power for controlling shareholder will reflect the out-of-balance in the interest relationship. Namely bring out the objective fact that the company and the little shareholders' interests are damaged, so the third standard is considerable and easily undertook, and the other interests "damage" standard to judge the abuse of controlling power, three standards exist insufficient, so the article maintain that we should use the "interests damage" standard to judge the abuse of controlling power.The last part analysis our country's company law and the content of the listed company manage criterion, some regulations of these clauses are not overall, somestipulations are incomplete and lack effectiveness, some articles' legal levels are relatively low. But the new company law revised these inadequate. At the end of the dissertation, the author makes some suggestions on the legislation of China.