The Research On The Status Of Shareholder's Representative Action Litigants In China

Shareholder's representative action is such a system that when the company's legal interests are infringed, especially infringed by the directors, supervisors, senior officers, etc, and the company delays or refuses to sue the tortfeasors, the qualified shareholders can file a lawsuit on their own behalf towards the tortfeasor to safeguard the interests of their company. Therefore,there are not only similarities,but also obvious differenties between shareholder's representative action and other special civil actions such as shareholder's direct action, subrogation, and group action.The shareholders who can be proper plaintiffs should comply with both the substantial law and the procedural law. According to the company law of PRC,the proper plaintiffs who satify the substantial requirements should be the shareholders in the case of a limited liability company, or a shareholder that has independently held, or the shareholders that have held in aggregate, 1% or more of the shares of the company for more than 180 consecutive days in the case of a company limited by shares.This regulation is imperfect.In order to improve it,the company law should introduce contemporary ownership principle. As for the procedural requirements,the demand requirement of shareholder ' s representative action should be improved and the lawsuit expense guarantee system should be introduced.According to PRC company law and PRC securities law,the defendants in shareholder's action include directors, supervisors, senior officers, any shareholder who holds more than 5% of the shares of a listed company, controlling shareholders, de facto controlling persons, and any other person who infringes upon the lawful rights and interests of the company. By the research on American,Japanese and Chinese Taiwan's relevant legislation,'other person'in PRC company law should be interpreted as company promoter, liquidator, controlling shareholder, de facto controlling person, accounting firm serving the company, law firm serving the company, and any other natural persons, legal persons or other organizations with substantial influences over the company.Company and other shareholders are special ligitants in shareholder's representative action. The company can join the shareholder's representative action as a ligitant in many foreign countries.In China, a company's litigious status is neglected, and there are some controversies among scholars.By analyzing their different opinions,the conclusion is that the company is not the necessary litigant in action.It is decided by the company itself whether to participate in the action or not. There is no clear regulation concerning other shareholders'litigious status in China. The legislation of Japan is reasonable. i.e. other shareholders should have the right to decide whether to participate in the action or not. If they participate in the shareholder's representative aciton,the rule of joint litigation should be applied to them.Other shareholders have the right to apply for retrial in case that the plaintiff and defendant collaborate to infringe the interests of the company.