The Research Of Controlling Shareholder Duty And Liability

Fiduciary duty under traditional company law is generally referred to as duty of care and duty of loyalty assumed by senior management of the company including director and manager. Pursuant to the principle of majority and the principle of equality among shareholders, shareholder does not have additional liability to the company and the remaining shareholders other than the duty of capital contribution. Following continuous occurrence of infringement of minority shareholders'interest by controlling shareholders, conceptual development from formal justice to essential justice, and continuous deepening of the knowledge of the "principle of majority", the bearers of fiduciary duty are expanded to include controlling shareholder by the academic community. Up to present, the fiduciary duty of controlling shareholders have been established appeared in both Civil Law Jurisdiction and Common Law Jurisdiction.Due to unique shareholding structure of our country, directors and mangers in joint stock limited companies especially listed companies have little knowledge of responsibility and good faith. The deep reason of ignoring the interest of company and shareholder is that right of ownership and right of management are not able to be separated and management of the company is still inferior or subject to controlling shareholders. The controlling shareholders' act of abusing controlling right will harm the company and minority shareholders, which not only leads to serious inbalance of the company's internal interest but also violates the ultimate goals of law, which are fairness and justice. The legislation practice of modern company law acknowledges and confirms the legal status and decision-making right of controlling shareholder as well as underscores the regulation and restriction of controlling shareholder's act. Hence, how to reasonably define controlling shareholder's liability, based on which to regulate the act of controlling shareholder and to establish practical power control and prevention mechanism and accountability mechanism have critical theoretical value and realistic meaning.In the first part, the author studies legal definition of controlling shareholder and the standard and classification for such definition. In addition, the author compares controlling shareholder and several similar concepts.In the second part, the author studies legal historical background, jurisprudential background and principal contents of the liability of controlling shareholder. The contents of liability of controlling shareholder include duty of care and duty of loyalty. The former requires controlling shareholder to give the same care in operating the company as any cautious person shall perform when operating its own affairs; the latter prohibits self-dealing and right abuse. The author then compares the difference between controlling shareholder's duty and director's duty.In the third part, the author studies the liability of controlling shareholder, including civil liability, administrative liability and criminal liability. The liability of controlling shareholder is dominated by civil liability, including responsibility of violating duty of care and duty of loyalty;In the forth part, the author studies how to prevent controlling shareholder from abusing controlling right. The author analyzes the current condition of controlling shareholder's abusing controlling right, detrimental effect of abuse of controlling right, the reason for such abuse, current legislative situation of controlling shareholder's liability and responsibility and the problems to be solved, including the perfection of laws and regulation in relation to controlling shareholder. It is not sufficient to establish duty and responsibility of good faith for controlling shareholder, some legislative system is required to establish to strengthen liability and responsibility of controlling shareholder for the purpose of ensuring shareholder to implement duty of controlling shareholder, including restriction of voting, cumulative voting, right to know, independent director and right of action (direct suit and derivative suit).