Legal Definition For Affiliated Transaction Of The Listed Company

Affiliated transaction is an economic phenomenon that becomes more and morecommon and complex in modern society. Its essence lies in its departure from theprinciple of meeting of minds in the contract law. Instead, it is a kind of transactionthat reflects only the will and interests of one party. Affiliated transaction itself isneutral, and not illegal. On the one hand, affiliated transaction is considered by somearguments to be able to save the costs and improve the efficiency of enterprises. Onthe other hand, affiliated transaction's price deviates from the market level, causesinterests inclination, and eventually translates into unequal exchange activities.Affiliated transaction reduces the level of autonomy of market body, increases therisks of the listed company's trading, damages the interests of small shareholders andcreditors. These negative effects shall not to be neglected, so it is very important toreinforce the regulation of affiliated transaction, to protect our investors'rights, toimprove the capital market's efficiency, and to maintain the prosperity and stability ofthe security market.To regulate the transactions between affiliated parties, it is necessary to defineassociated parties and their transactions in a scientific way. Defining the associatedrelationship is a precondition to define the transactions between associated parties, because as the principal part of associated relationship, it is one of the main factors tojudge the existence, alteration and termination of associated relationship. Firstly, ournew Company Law only defines the affiliated party in simple way, and worse still, thenew Securities Act even makes no definition of the affiliated party. The listed rules ofShenzhen and Shanghai Security Exchanges put forward a specific and concretestipulation on the scope of the affiliated party by enumeration, but there are someunavoidable omissions. Secondly,the key to making those mentioned laws andregulations lies in the accurate determination between fair affiliated transactions andunfair ones. Due to the absence of a clear standard for affiliated transactions andaffiliated party until the time being, this paper discusses China's legally definingstandard and scope for affiliated party and transaction between concerning legislation.In comparison with developed countries, the legislation of our nation is still far fromthe international level. So this paper gives analysis on the legislation of othercountries regarding this phenomenon. On the basis of analyzing the nature andcharacter of affiliated transaction, this paper mainly comments the legal defining ofthe affiliated transaction of the listed company.The paper is composed of three parts that are the Preface, the Dissertation itselfwhich consists of three chapters, and the Epilogue.Chapter one is about the nature and character of the affiliated transaction of thelisted company. Firstly, though examining the phenomenon of the widespreadaffiliated transaction, the author tries to analyze the nature of widespread transaction.Then, the author analyzes the basic elements of affiliated transaction from the fouraspects of the main body, object, motive and manner. Finally, the author sums up thefour basic features of affiliated transactions.Chapter two discusses the legal definition of affiliated transaction of the listedcompany and their affiliated parties. There are there parts. In Part one, the authorcompares the legal definitions of affiliated transaction between home and abroadthrough studying the related provisions and laws regarding affiliated transaction andproposes the basic ideas to define affiliated transaction. In Part two, through defining the affiliated relationship detailedly, the author analyses the standards to definedetailed relationship, which prepares the foundation to define detailed transaction.Chapter three focuses on the rules and standards of defining detailed transactionin the practice. The author introduces the specific rules and standards to definedetailed transaction in the practice and provides a way to identity detailed transaction,and also provides a basis for judging the effect of unfair affiliated transaction of thelisted company in the trail.