On Corporation Law Regulations Of Controlling Shareholders' Affiliated Transaction

Affiliated transaction,going with the development of corporation—model enterprise,is a relatively complicate economic phenomenon,which is involved in and integrated with all kinds of shareholders on the lay of benefits and interests.On the history of American company law,the existence of affiliated transaction was strictly forbade.But because of affiliated transaction post of promote the business enterprise scale conduct,decline low cost,exaltation business enterprise market competition ability etc. advantage; the American company law adopts a tolerant attitude to the affiliated transaction gradually.Really,affiliated transaction is a double blade sword.Although its existence has a certain advantage,because the special both parties of affiliated transaction , usually make the affiliated transaction ineluctability to produce unfair bring other benefits corpuses bane.The controlling holders'affiliated transaction has more harm.The controlling holders make use of control to enfore the affiliated company engage the affiliated transaction.Such conduct bring harm to the affiliated transaction.In recent years,on China's securities market, controlling shareholders use affiliated transaction to harm the interests of affiliated transaction occurred frequently.The listed companies become the tool of controlling holders for their own profits,bring the damage to the investors and listed companies. China has cast a shadow over the stock market, resulting in a large number of investors lost their confidence. These phenomena caused note of the securities industry and law experts.The article is composed of three parts.The general inspection to the affiliated transaction take possession of the first part.The article evolves in the logical order of guarantee the fairness of affiliated transaction and civili liability of controlling shareholders for the purpose to establishing and perfecting effective and orbicular system.The first part is a general inspection to the affiliated transaction.First,the controlling holders'affiliated transaction is defined.In my view,the affiliated transaction can divided into two parts- board director's outlaw transaction and controlling holders'affiliated transaction.In foreign companies practice ,the investors are scatter.Thus the legislative attitude largely focused on the"director's outlaw transaction". The law also focus on regulating this part of the transaction.But in our country because of the special structure of the ownership,so the affiliated transaction belongs to cotrolling holders'transaction mostly.Secondly,discuss about the harm of controlling holders'affiliated transaction.In one hand it decline the ability to operate the listed companies independent.Second,it led a loss of confidence of the investors. Thus our country must establish and improve the relevant legal regulations of the controlling shareholder affiliated transactions.Finally,as the basis of anlysis the nature of affiliated transaction,discuss about the legislative attitude to the affiliated transaction. Since there are lower transaction costs, increase market competitiveness advantages, the law should allow the existence of the transaction.On the other hand ,because of the special parties ,the transaction may be unfairness by nature.The law must value it,build up various perfect system,make an effort to keep this kind of transaction of equity and safeguard the stakeholders interests.The second part discuss about guaranteeing the fairness of the controlling holders'transaction.In the first part,the author has already discuss the law should"diversion than blocking it"to the affiliated transaction.On this premise ,the law should put the energy to guarantee the fairness of affiliated transaction.If control the affiliated transaction attach with the request of equity shoule from the procedure and entity two part on a study. Guarantee the fairness of procedures, starting from the company's governance body, through a series of system "acquired" the unfairness nipped in the bud stage. This series systems include the general meeting of shareholders approved the transaction, affiliated stockholders of evasion related to the voting system and the establishment of a system to protect other small shareholders the right to know and question. These three systems are linked together, become the first barrier to protect the fairness of the affiliated transaction.Guarantee the entity fairness of affiliated transaction was mainly focus on the court fairness judgment. Once if there are some procedural fairness meet affiliated transactions involved in the lawsuits. Court should establish certain criteria to judge whether the transaction is fair to the real fairness.The author through analysis of the fairness standard of entity in the American company law,China should allow to judge the fairness of a substantive review of the transaction, but such a review should have a definite standards that is the basis for the review to report the transactions, thus excluding the subjective judgment of the judges.The third part discuss about the civil liability of controlling holders. The realization controls the shareholder in not fairly and just to beconnected in the transaction the civil liability, is to controls theshareholder behavior illegal penalty, is to not fairly and just isconnected in the transaction other benefit correlation realitiesconcerns.The civil liability can divided into two parts-liability to the small shareholders and liability to the creditors.As a result the author also divided into two parts to study.The civil liability to small shareholders based on the Fiduciary Duty.Because of the first duty was damaged the controlling holders must bear the second liability.To realization the controlling holders'civil liability ,the small shareholders can indirectly fullfilled through the request of the affiliated transaction.However,if the subsidiary company under pressure not undertake the civil litigation,the small shareholder can through the derivative litigation to protect their legitimate interests. However, derivative litigation related controlling holders'affiliated transactions, there are many peculiarities. As the original, the defendant, instead, the special pre-procedure and the burden of proof is worthy of our concern. In particular, the burden of proof issue deserves more careful consideration of the legislation, only to the burden of proof to be perfect. The purpose of the shareholder's derivative action could not be achieved . Be implemented in the interests of the minority shareholders, controlling shareholders should be concerned about civil liability to the external creditors. Controlling shareholder funds because of the large number of affiliated companies seized, inevitably given the decline in the solvency of affiliated companies, therefore external creditor interests will be Damage. Therefore external creditors by the "lifting of the corporate veil" and "deep Ishihara" civil responsibility of the controlling shareholder remedies office. These two principles can be applied to the operational phase and the phase of bankruptcy. In our new "Company Law" has to "kick the corporate veil" to be provided "deep Ishihara" have not mentioned, This is our future legislation needed to be improved. In particular its constitutive elements of the design must be severed, it can be the exact purpose of achieving.