A Research On The Fiduciary Duty And Responsibilities Of Controlling Shareholders

In view of efficiency,"the majority rule"is mostly applied to the voting in modern companies. Based on this principle, the shareholders'voting validity is in direct proportion to the quantity of their shares. In other words, shareholders whose investment or shares amount to more than 50%, or less than 50% but are still influential in the resolution of the board or general meetings, can make themselves controlling shareholders, which enables them manipulate the board or general meetings with ease and actually have the company under control. In fact, it is a common phenomenon for controlling shareholders to abuse their controlling power to infringe on the rights of the company and other minor shareholders, especially in listed companies, most of which have transformed from state-owned enterprises and the state-owned shares dominate the whole company. In large joint-stock companies, the power abuse of controlling shareholders for their private interests will invade the rights of the investing public, kill their enthusiasm for investment and jeopardize socialist market order and social stability. Therefore, it is necessary to restrict controlling shareholders'actions with special obligations and responsibilities. Controlling shareholders'obligations are mainly composed of the fiduciary duty, including duty of care and duty of loyalty. And it is an inevitable requirement to impose corresponding responsibilities on controlling shareholders to restrain them from abusing their power. In addition,"remedies and rights are inseparable", and in order to restrict controlling shareholders from abusing their power, the new Company Law has provided an amount of access to remedies, which has much room for improvement.This thesis attempts a comprehensive discussion of controlling shareholders'duties and responsibilities by means of the methodology of dialectic and comparison. The thesis consists of six chapters as follows:Chapter One starts with a case followed by the legal definition of controlling shareholders and the systematic analysis of the standard of the definition by means of a comparative analysis of the definition of controlling shareholders and other relative definitions and the classification of controlling shareholders for the purpose of discovering the range of controlling shareholders and actual controllers and laying a foundation of determining the duties and responsibilities of controlling shareholders.Chapter Two exposes the ways and harmful consequences of controlling shareholders'abuse of controlling power and analyzes the reasons, expressing the necessity of legally standardizing the activities of controlling shareholders and determining their duties and responsibilities.Chapter Three depicts the advancement of the fiduciary duty, clarifies its two components—duty of care and duty of loyalty, compares it with the fiduciary duty of directors, and analyzes the current situation and deficiency of legislation of controlling shareholders. The main purpose is to illustrate the feasibility of controlling shareholders'fiduciary duty.Chapter Four analyzes the relationship of three legal responsibilities, emphasizing the civil liability, which constructs the liability system of controlling shareholders from the angle of law improvement.Chapter Five analyzes the system remedy in company administration and shareholders'judicial remedy to discover and perfect the access to legal remedies in terms of preventing controlling shareholders from abusing their controlling power.