Some Legal Issues On The System Of Shareholders Representative Action

Shareholders representative action is a system which protect company's interests when the company refuses to prosecute .For the company's interests. Minority shareholders prosecute in their own name, and the compensation is attributable to the company. The thesis discusses the problem from the perspective of encouraging measures. It is divided into four chapters.Chapter one. The right of minority shareholders is aggrieved in corporate governance and do a brief overview of the system. It is divided into three sections.Section I.First of all, the author states the signification of controlling shareholders. Though this we can know that the control force to the company rather than the amount is important .It is also based on this that when we divisive the shareholders, we must determine and describe it at the base of the truth,Section II. The author discusses there are someone aggrieve the minority shareholders in corporate governance and the reasons . minority shareholders are facing not only the controlling shareholders but also the managers. There is three reasons: First of all ,contesting interests. Second, the power of the contestants is uneven. Finally, the legal system is imperfect.Section III. From the perspective of improving the legal system the thesis advance representative shareholder action system and introduce the evolution of the system .Chapter two. The thesis discussed the positive significance and encouraging measures of shareholders representative action This is the focus of this article. It is divided into two.Section I. The positive significance of shareholders representative action. It concludes restraining function and relief function. Restraining function in advance is a system which is a threat to the company's controlling shareholders and directors, supervisors, senior managers, they will be deterred from wrongdoing in a certain extent. Relief function is that minority shareholders can protect their interests through litigation, when the threat of the sanctions is not enough to stop the company's controlling shareholders , directors, supervisors and senior managers to risk aggrieving the interests of the company,Section II. The thesis discusses the encouraging measures of Shareholders representative action .There are ten point:First, expanding the scope of actionable conduct. The caring duty of the directors, supervisors, senior managers and the acts of third person included are also included in the scope of actionable conduct.Second, expanding qualification of the plaintiff. Complying with"the principle of holding stock at the same time",we should also stipulate exceptions: First of all, after aggrieving the interests of the company and before informed or to public, the shareholders who don't speculate have the right to initiate actions. Secondly, giving the lawful successor the right to initiate actions after the death of a natural person shareholder and giving the same right to the heirs of corporate shareholder after its termination. Thirdly, because of the company's controlling shareholders, directors, supervisors, senior managers using its dominant position , the shareholders lose qualification. giving them the right to initiate actions.Third, expanding the scope of the defendant. there are three standpoints about this. Limiting the scope of the defendant strictly, limit the scope of the defendant generally, and unrestrictedly. To protect the rights of minority shareholders possibly, the scope of the defendant should be broad.Fourth, treating the relationship between shareholders representative action and shareholders direct action flexibly . To protect the interests of the company is also in order to protect the interests of shareholders, the purpose is the same for both, and there is less restrictive conditions to direct action. Therefore, it should be supported when direct action is eligible.Fifth, collecting the case fees on non-property case. Taking shareholders representative action claims as non-property claims, according to certain standard, collecting different, fixed fees.Sixth, giving the plaintiff the right to request compensation for reasonable costs , direct compensation and award.Seventh, encouraging the lawyer to carry out the risk agent, and get fees after victory.From the economic strength of minority shareholders, these three points states law is tilted in favor of minority shareholders.Eighth, reversing and transferring the burden of getting proof. Because the strength of both sides are imbalance, it is unfair obviously that"who advocates, who bear the burden of getting proof", according to ordinary rules of evidence.So,it is necessary to reverse and transfer the burden of getting proof.Ninth, malicious shareholders bear liability when lose an action. From the perspective to protect the interests of the company ,the author states that when shareholders is malicious, the defendant can get compensation ,and when shareholders lose only ,the company can get compensation .Tenth, stipulated special time limitation. Because the plaintiff know little about the company's business, the weak strength of its own, in addition legal relationship is complex, the fact is hard to distinguish .If rush to prosecute, there is no advantage to minority shareholders.Chapter three. The thesis discusses the negative effects and binding measures of shareholders representative action, It is divided into two section.Section I. The author discusses the binding measures of shareholders representative action .There are three aspects .First, it is a mean with which lawyers cheat money. Second, it is no use for increasing the value of company .Third, it undermine the inherent right of the managersSection II. Because of the negative effects, it is necessary to develop binding measures to limit the number of malicious actions. Though binding measures we can protect the goodwill actions better. The author combine encouraging measures to introduce binding measures. They are setting up requesting company before v, setting up security system of action cost , setting up limitation for reconciliation and withdrawing. But we must know that binding measures is only mean, protecting rights is purpose.Chapter four. In the thesis ,the author combining with the actual situation of our company law discusses how encourage minority shareholders to protect their rights. First of all, China Company Law only stipulates that the loyalty obligation of directors, supervisors, senior managers is the cause of action . But caring obligation is also the duty of directors, supervisors, senior managers, therefore it is necessary to stipulate the caring duty of company directors, supervisors, managers and take it as a cause of shareholders representative actions. Secondly, according to the proportion of shareholding and ownership of time constraints, the author combining with the actual situation in our country think that it is too much to protect minority shareholders.