Research On The Controlling Shareholder's Fiduciary Duty Of Joint-stock Company

Generally speaking, the shareholders of joint-stock company can be divided into two groups: controlling shareholder and minority shareholder. The controlling shareholder owns the most of the company shares, being placed in absolute or relative controlling position. As a result, when it uses its controlling power, it has the natural tendency to make a point of the self-interest, neglecting the minority shareholder'benefits. When company system develops to certain extent, the phenomenon of controlling shareholder abusing the controlling power is inevitable. Because our country has its special historical background, state-owned shareholder or state-owned corporative shareholder has"only one big"position in joint-stock company. Recently, the controlling shareholder exercises the controlling power unjust. The phenomenon of manically violating the rules to operate piles up one after another, no less to say forbidding. The reason is that the governance structure in company is distorted. At she same time, the prevention mechanism to checking and balancing the benefit conflict is lack or invalid generally in current Company law. So, the establishment of fiduciary duty of controlling shareholder can make the power abusing behavior of controlling shareholder to be under control effectively, can limit and rectify the abuse of the most capital decision, can protect the benefits of the minority shareholder and company. This is the inevitable legislative trend in Company Law.The controlling shareholder'fiduciary duty has been a relatively perfect system and there is a relatively systematic theory on it in western developed countries. It plays an important role in regulating controlling shareholders'behavior and protect company'and minority shareholder'interest, which builds a good example for improving our country's company governance. Because the establishment of Chinese company governance system and gradual improvement hereof shall draw the experience of western advanced legal system, the scholars on company law in china shall use the comparison research method. By adopting comparison research method and integrating Chinese corporate practice, the thesis systematically discusses relative questions on how to learn Two legal system's controlling shareholder's fiduciary duty to expect providing a good guidance for improving our company law. There are five chapters in the thesis. The first chapter analyses how to define the controlling shareholder. There are two standards in defining the controlling shareholder: formal standard and substantial standard. Adopting substantial standard to define the controlling shareholder is the tendency of global legislation. Because of special circumstances of our country, this thesis thinks we should adopt substantial standard and combine formal standard. Following this, the thesis analyses the differences of controlling shareholder and relative conceptions.The second chapter is on the evolvement and establishment of controlling shareholder's fiduciary duty. The controlling shareholder's fiduciary duty evolves from fiduciary relationship theory. The traditional theory holds the controlling shareholder does not assume fiduciary duty. But with the development of corporate practice, the developed countries established the controlling shareholder's fiduciary duty by legislations or judicial precedents for solve the problem of controlling shareholder's abusing the control rights. Western scholars had an intense discussion on the theoretical accordance and developed a series of theories. These theories are different in discussion angles, but all draw a conclusion that controlling shareholder should assume fiduciary duty.The third chapter is on the object and content of the controlling shareholder's fiduciary duty. This thesis thinks the controlling shareholder assumes fiduciary duty only to company and small shareholders. The duty contains duty of care and duty of loyalty.The forth chapter firstly analyses four standards on determine whether the controlling shareholder violate the fiduciary duty in western company law:"business judgment rule"standard,"substantial fairness"standard ,"legal procedure"standard, and"interest injure"standard. This thesis advocates"business judgment rule"standard and combine"substantial fairness"standard.. After that, according to"business judgment rule"standard and"substantial fairness"standard, this thesis analyses several main performances of the controlling shareholder's violating fiduciary duty in Chinese joint-stock companies: false capital contribution, embezzlement of corporate assets, inappropriate connected transaction, usurping corporate chance, malicious sales of corporate control rights, squeeze-outing and deceiving small shareholder. There are deep reasons of the controlling shareholder's violating fiduciary duty in Chinese corporate practice and the controlling shareholder's abusing of control rights seriously harmed the company's continuous and healthy development and establishment of market order.The fifth chapter discusses several legal considerations on improving the system of our country's controlling shareholder's fiduciary duty. Firstly, it analyses the reasonability of establishment of the controlling shareholder's fiduciary duty in Chinese company law. And then, it provides several pieces of legal advice on assuring the realization of the fiduciary duty of the controlling shareholder of the joint-stock company in China. The advice contains establishing the clause of controlling shareholder's fiduciary duty in company law, improving the shareholder structure, improving the corporate governance structure, improving the civil liability of the controlling shareholder's violating the fiduciary duty and improving the system of lawsuits remedy.