Legal Issues Concerning The Criteria Of Actual Controller In Listed Companies

The actual controller is the person who has the ultimate and exclusive power to dominate the activities of a company through investment, contract and other arrangements. Actual controller upset the balance between majority shareholders, minority shareholders and managers in corporate governance. By forcing a listed company to function in the manner that actual controller could seize his private benefits, actual controller exploits other shareholders and debtors through manipulating the controlling shareholder and his agents in the board of directors. In order to regulate the activities of actual controller, we must first clarify the criteria of actual controller.To optimize the criteria of actual controller of our country, we should find out how many categories of actual control there are, compare the criteria of our country with other countries and regions, and find out the problems in our current practice. This thesis is divided into four chapters as follows:Chapter one concerns the essence of actual control and the historical development of corporate control. After analyzing the meanings of "actual" and "control", the author sums up five aspects of the essence of actual control. From the developing history of corporate control, as well as the studies on "the separation of ownership and control", the author points out the influence of corporate governance brought by actual controller.Chapter two mainly talks about the categories of actual control. The author discusses the classic classification of corporate control by Professor Berle and Professor Means, analyzes what influences Voting Trust and Proxy Solicitation have on corporate control. Then the author shows his proposition that actual control could fall into six categories, which includes share-voting control, management control, joint control, control contract, control through influence and other particular types.In Chapter three, the author researches on the criteria of actual controller of our country, other countries and regions, and the current practice of our country. As a result, several problems are found in the criteria of our country.Chapter four focuses on how to optimize the criteria of actual controller of our country. The author clears up the connotation and extension of actual controller, compares the concept of actual controller with controlling shareholder, share-controller and affiliated person. Then the author suggests that the criteria be optimized in four aspects: First, share-voting control should be made the foundation of the criteria and the Securities Regulatory Commission should be granted the power to modify the inferred proportion to the changes of circumstances. Second, other categories of actual control should be brought into the judging scope of the Securities Regulatory Commission. Third, the institution of judging actual controller should be designed from who can start the judging procedure, what are the reasons, the scope of investigation, the form of the determination, the time limit and the effect of the determination. Fourth, the rules of information disclosure of actual controller should be completed. Finally, the author points out the importance of optimizing the criteria of actual controller of listed companies.