On Shareholder Derivative Litigation System And Its Improvement In China

Shareholder Derivative Litigation System, also called Shareholder Representative Suits, means that When the interests of the company are infringed while it fails to or refuse to investigate and affix for the infringer responsibility, one or more shareholders with the legal qualification will file a lawsuit instead of the company for the interest of the company, and request the persons that infringed the company interests to compensate its loss. Shareholder lawsuit since its birth, there has been two major thematic exploration and research, which seeks to maintain efficiency and attempt to achieve a balance between the interests of company and the interests of minority shareholders,shareholder lawsuit on behalf of the plaintiff when the proper principles and exceptions to the principle of majority. The thesis is mainly focusing on the first question. And it is divided into four parts.The first part overview of Shareholder derivative actionShareholder derivative litigation arised from the late 19th century Anglo-American legal systems, equitable laws, with the British case of "Foss v. Harbottle" rules established by some of the "exception rule" and gradually established and perfected. Foss v. Harbottle (Foss v. Harbottle) took the lead in the equitable creation of a shareholder derivative lawsuit in the first case. The case established the rule known as "the majority rules", of course, there are exceptions to the rule. Shareholders derived litigation system was gradually absorbed and learned, and eventually becomed a specific legal relief program system in Civil procedural Law and Corporation Law.Our new company law of different suspected inflictions caused by the defendant in the shareholder of a derivative action of different provisions, in roughly 150 law, the article 152, article 21 and 113 regulation. Among them, the article is aimed at 152, the directors, supervisors and senior management personnel and any violations to the interests of the company a derivative action filed, Article 21, 113 of affiliated transactions are about illegal prohibited and defects of the board of directors of a director of the relevant provisions of the derivative action, which is also a kind of special circumstances derivative action.Shareholder litigation system derived as a generation of economic measures, a special kind of legal system, and has its own characteristics. Firstly, the shareholders' representative lawsuit is derived from the"subrogation"and nature "dual characteristics. Secondly, shareholders, win benefit derivative action, rather than the ownership, because of their right from company shareholder lawsuits. Thirdly, the shareholder litigation is nominally, instead of the real meaning of the plaintiff, the real plaintiff is company. Meanwhile, the shareholders of derivative action is the capital of the majority of corporate governance principles of an exception and supplement. Finally, the shareholder derivative action is a remedy, which restricts the freedom, his company disciplinary sanction his right to avoid a company of arbitrary and gives the plaintiff arbitrariness, for the interests of the company and shareholder's right enjoyed by its own name.The second part derivative litigantsThe establishment of shareholders derivative action range of world basically has two modes. The first is shareholder capitalism. In this mode, the legislation of the plaintiff's identity must be very strict with qualification of shareholders. The second is Stakeholder doctrine. In this model, the stakeholders under the scope of the plaintiff are more widely, both for the interests of the company and the fundamental interests of stakeholders including surplus of ownership, but also including company shareholders of other stakeholders. This legislation pattern is obviously eased the identity of the plaintiff, the plaintiff range than purely natural and scope of the plaintiff under socialism shareholders more widely.Plaintiff includes derivative action common Stockholders and preferred shareholders . The requirement of the plaintiff qualification is mainly shown in two aspects. First ,it must have the same period of ownership. Second it must be able to fully represent just the interests of the company. Shareholders of these two conditions constitute the necessary element of plaintiff eligibility requirements, and neither is dispensable. The defendant is the leading interests of the company suffered losses of directors,supervisors, senior managers or controlling shareholders of the violator or any third party. Shareholder derivative litigation defendants include two parts, first of all, it is mainly the company's internal staff, the company's directors, supervisors and senior management personnel, the other is any infringement of third party interests of the company.Shareholder derivative litigation in the legal status of legislation are different in different countries. In China, the new "Company Law" have yet to be clearly defined. The author believes that the existing legal framework in China, we can refer to Japan's legislation on the company's shareholder derivative action in the law so that companies can either participate in the proceedings, may not participate in the proceedings. If the company participate in the proceedings, it could be classified as the third person, and this third person should be more appropriate without independent right of a third.Other shareholders in derivative litigation in the legal status of countries have different legal practice. In China, although the other shareholders in derivative litigation status has not been as clearly defined, in the future shareholder derivative lawsuits pending, the court should allow other shareholders under the right conditions to participate in the ranks of the plaintiffs,and those who refuse to participate in the proceedings are not suitable as a plaintiff or a third person.The third part deficiencies and difficulties of ShareholdersDerivative Litigation in ChinaDerived Lawsuit defects are mainly embodied in the following aspects. First, there is lack of legislative and legal theory. China's "Company Law" has no shareholder derivative lawsuits related to the content of specific provisions and provisions to make clear, also there is no corresponding set of system building. Besides, the lack of right of appeal filed derivative action based on the existence of the drawbacks of lack of legal theory. Second, there are some deficiencies in Pre-procedure. The shareholders on the board of supervisors or board of directors received a written request to initiate proceedings after the act is not as required. At the same time, it is too simple to set up,which is not conducive to the company, especially a limited run.What's more,loose pre-intervention program will lead to court over the company disputes, judge with justice instead of the Business Judgement. And China has not yet requested the object the establishment of the accountability system.It is more regrettable that the fact that the company received compensation causes the problems. Finally, incentive mechanism and the binding mechanisms are weak. Shareholder derivative litigation in China is still very weak in incentive mechanism, which is mainly in three areas, the heavy cost burden on the plaintiff "overwhelmed",in favor of the plaintiff after the selfless and the irrational distribution of benefits can not reflect the "fair" principle, minority shareholders of evidence difficult. Similarly, it is weak in binding mechanism for derivative litigation, for example, the lack of bad faith litigation procedural requirements negates the mechanism,the lack of legal costs derived from the relevant provisions of the secured system and derivative action more lenient pre-programming.Shareholder Derivative Action mainly faces the main difficulties in two ways in China. The first one is the dilemma from the legislative level .Two interests with shareholders, blur the boundaries of the main body, and it is difficult for a clear demarcation of boundaries. Moreover, public rights and the right of self-interest, the exercise of the rights of players find it hard to distinguish. And shareholder derivative action suffered by the traditional concept and our unique cultural identity disturbance for a long time makes our country shareholder derivative action face another major dilemma.The fourth part perfect of Shareholders Derivative Litigation in China. As for perfect of Shareholders Derivative Litigation in China, I think we can find a way from the following sides,construction of the derivative litigation related systems.,improvement of pre-litigation procedure derived and intensification of the derivative litigation incentive and restraint mechanisms. The writer think the first approach is to construct a comprehensive company law as the core, supplemented by judicial interpretation, administrative regulations and other laws of perfecting the overall feasible shareholders derivative action. To achieve this goal, we should be clear about several facets of the specific legal provisions, the jurisdiction of shareholder derivative litigation, derivative litigation limitation, the plaintiff's rights, duties and responsibilities in the derivative litigation , the scope of the defendant's principal and the cause of litigation. The second measure can be achieved in three ways, one is to determine the introduction of commercial principles and learn special litigation committee system from the United States, , another is to strengthen supervisors, directors diligence obligations, supervision of supervisors, shareholders request the board refused to give reasons, the last is to play the discretion of the court to hinder meaningless derivative litigation. And the last measure is very complex to implement. But we can achieve the goal all the same. On the one hand, we have to improve shareholder derivative litigation incentives. First, the Derivative Action should be incorporated into non-property nature of the case. Second, in good faith by the court dismissed the plaintiff filed an application for leave requires companies that it bears a reasonable fee. Third, the plaintiff stockholders have the right to demand the defendats to provide reasonable compensation after the successful suit. Fourth, with regard to security system at the cost of litigation, the plaintiff shareholders in good faith under any circumstances don't need to provide any guarantee under any circumstances. Fifth, The Plaintiff shareholders may share more appropriately after the successful lawsuit, and the companies may also reward them. Sixth, legal burden of proof should be given immunity from the plaintiff shareholders. Last, legislative orientation should be actively encouraged to bring shareholder derivative lawsuit, shareholders of rights awareness training, to fully understand their rights. On the other hand, we must strengthen our shareholder derivative action binding mechanism. Firstly, we should adhere to appropriate judicial intervention in the idea that the autonomy of private law in the protection of the clients under the premise of private law on shareholder derivative action appropriate intervention. Secondly, for malicious litigation shareholder, the defendant may require compensation-related losses. Lastly, when the defendant has sufficient reason to believe that the plaintiff shareholders filed a malicious complaint, they can ask the court to order the provision of appropriate security.