A Study On The Lawsuit System Of Shareholder's Representative

On Jan. 1st, 2006, Company Law was enacted. Article 152 stipulated lawsuit system of shareholder's representative, endowing the shareholder the right to do the lawsuit on behalf of the company. However, this system is not perfect with lots of shortcomings. Its operative capacity is not strong and the relevant civil lawsuit and the preceding procedure rules of the non-law case have not been established. The court often has no idea while hearing the case of shareholder's representative lawsuit. In addition, the marketing economy of China develops fast and China is rising as a powerful country. As the most active element of the marketing economy, the number of companies increases rapidly. It becomes a normal phenomenon for the big shareholders to harm the interest of the small shareholders. Therefore, there are more and more cases of shareholder's representative lawsuit. Thus, the conflict between these two becomes more and more prominent. It's urgent for China to perfect lawsuit system of shareholder's representative.There are four chapters in this thesis. The former two chapters focus on theory, the third chapter covers the practice and the forth chapter proposes some advice on constructing lawsuit system of shareholder's representative of China.The first chapter studies the basic principle of shareholder's representative lawsuit. From the comparative view, the author compares and studies extraterritorial lawsuit system of shareholder's representative and illustrates the origin, development, definition, trait and the theoretical basis lawsuit system of shareholder's representative to make a primary understanding of the lawsuit system of shareholder's representative. Then the author analyzes and compares related systems with lawsuit system of shareholder's representative such as direct lawsuit system, lawsuit system of representatives and delegating lawsuit system of the creditor. Finally, the author demonstrates the double sides of lawsuit system of shareholder's representative from dialectical perspective. First, the author illustrates the value of lawsuit system of shareholder's representative, such as function of protecting the lawful right of minority shareholders and ensuring the normal operation of the management of the company and maintaining the good running of the securities business. Then, the author analyzes the disadvantage of shareholder's representative lawsuit including the fact that the abuse of lawsuit right will result in the change of value of shareholder's representative lawsuit, untempered shareholder's representative lawsuit will waste the lawsuit resource and the negative impact of shareholder's representative lawsuit on the manager. While shareholder's representative lawsuit is exerting its function, it is shackle for the manager of the company. If it is misused, there will be negative impact on the manager. The management goal of the company is to seek the highest level profits. A bad lawsuit system of shareholder's representative will block the interest of the company maximize. Analyze dialectically the shareholder's representative lawsuit to know lawsuit system of shareholder's representative further.The second chapter studies the basic principle of lawsuit system of shareholder's representative. The author takes the view that the basic principle of lawsuit system of shareholder's representative should cover timely share holding principle, goodwill lawsuit principle, doctrine of immunity for business judgment, exhausting the inner relief of the company principle, preventing abuse of lawsuit principle and ignoring the same lawsuit principle. As a system including the entity and procedure, lawsuit system of shareholder's representative must own the corresponding basic principle as the guidance. These six principles are restricting ones. Shareholder's representative lawsuit is a special lawsuit system with the company as the actual accuser, not the shareholder. As a result, lawsuit system of shareholder's representative plays an active role in managing the company, but, if there is no necessary restriction on the accuser shareholder, there will be abuse of lawsuit that will increase lawsuit trouble, disturbing the normal running of the company and doing harm to the development of the market economy. In this chapter, the author emphasizes the timely holding share principle and doctrine of immunity for business judgment. In the principle of timely holding share, the author holds the view that this principle is the limitation to the qualification of accuser shareholder as well as the protection on special obligee. For instance, in the following situations, the obligee has the right to refer to lawsuit system of shareholder's representative to maintain his own right: (1) after the natural person shareholder dies, his inheritor or legatee, but the change procedure of shareholder has not be finished; (2) when the legal person loses the qualification due to combination and schism, the new obligor of right; (3) though the change of shareholder through lawful transferring is not registered, the person exerting the right as well as undertaking the obligation of shareholder; (4) the tort takes place before the transferring of share and the transferee does not know the fact. In the doctrine of immunity for business judgment, the author takes the view that as long as the act belongs to the normal business judgment, the act of the director or senior managers should be exempt. In the business activities, risk and profit exist together. The bigger the risk is, the larger the profit is. If the doctrine of immunity for business judgment is not carried out, the managers of the company must be overcautious, which makes the company lose the chance to gain profit. Therefore, as long as the senior managers exert their duty of assiduity as well as adverting, their responsibility is exempt though it causes big loss to the company.The third chapter studies the core regulation of lawsuit system of shareholder's representative. The author takes the view that core regulation of shareholder's representative lawsuit includes the applicable scale of shareholder's representative lawsuit, restriction system of shareholder's representative lawsuit, inspiring system of shareholder's representative lawsuit, the procedure system of shareholder's representative lawsuit and does detailed research. In the scale of shareholder's representative lawsuit, the author studies the main body of shareholder's representative lawsuit such as the scale of accuser, the scale of defendant and the lawful position of the company. Based on the regulations of Company Law of China, the author also studies the object of shareholder's representative lawsuit, that is, the accuser shareholder could make the lawsuit on which harmful acts. In the inspiring system of shareholder's representative lawsuit, the author studies special collecting lawsuit fees system, collecting the pays for recovering system for the lawyer, complementary system of lawsuit fee and lawsuit interest division system. At the same time, the author argues that these inspiring systems do well to the spreading of lawsuit system of shareholder's representative in China. In the restriction system of lawsuit system of shareholder's representative, the author studies that the accuser shareholder should carry out the preceding procedure while proposing shareholder's representative lawsuit. He can make the lawsuit only after exhausting the relief of the company. If the accuser shareholder loses a lawsuit, he must shoulder certain legal obligation. Everything has two sides. Though a system is very perfect, there must be shortcomings and lawsuit system of shareholder's representative is not an exception. How to make it exert its own role, inspiring system and restriction system should be suitable. In the procedure system of shareholder's representative lawsuit, the author proposes his own opinion on domination, withdrawal of lawsuit, compromise, countercharge, lawsuit time, burden of proof, binding force and reexamination issue of shareholder's representative lawsuit. These issues are not involved in the practical Company Law of China. The special trait of shareholder's representative lawsuit determines that Civil Lawsuit Law is not completely applicable. As a kind of civil lawsuit, shareholder's representative lawsuit can not avoid the above issues.The fourth chapter proposes the legislature advice on construction of lawsuit system of shareholder's representative. Our lawsuit system of shareholder's representative is set up recently which is the building from principle perspective without any relevant rules. It is difficult to operate. As a country that carrying out statute law, China has no legal reference so that the lawyer and judges have no idea how to deal with this issue. According to the judicial practice of China, the author proposes some advice on legislation, hoping to aid the perfection of lawsuit system of shareholder's representative.