Research On The Shareholder's Right To Know Of The Limited Liability Corporation

As shareholders were progressively less involved in corporate management, the information asymmetry between shareholders and corporate officers is more obvious. Each country enacts statutes to provide a right of inspection for shareholders in order to protect the shareholders'investments in the company. Compared to the shareholding company, the shareholders of the limited liability corporation wanted to have access to corporate business information. Previous Company law in china concerning with the inspection right is rough. The new company law in china enlarges the scope of the shareholder's right of inspection, particularly establishing the right of inspection the account books. But the relevant provisions still seem too simple and insufficient for carrying out. The author discusses the relevant issues on the shareholder's right to know of the limited liability corporation, which focused on the shareholder's inspection right and based on a series of domestic and foreign cases and the Revised Company Law in 2006.Chapterâ… introduces the rationale of the shareholder's right to know of the limited liability corporation. Shareholders'right to know is a legal right to have access to corporate business information. Shareholder's right to know also can be divided into the shareholder's right to know of the limited liability corporation and the shareholder's right to know of the shareholding company. Furthermore, shareholders'rights to know have developed from two overlapping sources: a shareholder's property right in the corporation and the agency relationship that exists between shareholders and the corporation's management. The unlimited shareholders'right to know led to abuses, so the company law need establish limitations on shareholders'right to know.Chapterâ…¡presents who has the stockholder's right to know in the limited liability corporation. The earlier America Corporation Law defines"stockholder"as a record stockholder in a stock corporation. Now"stockholder"means a holder of record of stock in a stock corporation, or a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person. Company Law in china doesn't clearly define"stockholder". Whether defect shareholders, nominal shareholders, secret shareholders and the shareholders who have transferred the shares to others have the shareholders'right to know is uncertain in practice. The author will discuss these issues combining some cases.Chapterâ…¢presents the scope of shareholder's right to know of the limited liability corporation. Shareholders could inspect the shareholders list, bylaw, other books and records of a corporation and the books of a subsidiary and to copy or make extracts from these documents. In this part, the author particularly introduces three general approaches which have developed in determining whether the parent shareholder's right should be extended to allow inspection of a subsidiary's books and records in America.Chapterâ…£introduces statutory limits on shareholders' right to know. The limitations on Shareholders' right to know include objective limitation and subjective limitation. Now some countries statutes limit the statutory inspection rights to those shareholders who either were shareholders of record for some months prior to the demand or hold a minimum proportion of the outstanding stock. But more countries abandon this limitation. The majority of modern corporate statutes grant the right of inspections only to qualified shareholders making written demand for inspection at a reasonable time for a proper purpose. The new company law in china also established an abstract standard which is"proper purpose". In this part, the author introduces how to judge"proper purpose"and who places the burden of proof on the proper purpose.Chapterâ…¤introduces the shareholder s'right to know in china which focus on the article 34 of the new company law in china. Although the new company law enlarges the scope of the shareholder's right of inspection, relevant provisions still seem too simple. There are some issues in dispute, such as whether shareholders could inspect the source document, whether the parent shareholder's right should be extended to allow inspection of a subsidiary's books and records, whether shareholders could inspect the records of the board of directors and the board of supervisors. The author tries to answer these questions and advises some suggestions about the shareholder s'right to know.