Study On The Fiduciary Duty Of Majority Shareholders Of Listed Company In Affiliated Transaction

In related transactions, majority shareholder of listed company tend to abuse their controlling power. Based on the majority rule principle,majority shareholder can decide on directors and supervisors, thereby affecting affiliate company'decision-making, or directly exert influence on the affiliate company through general meeting of shareholders. Basing on his controlling power, majority shareholder can dominate affiliate transaction, thereby actually becoming"self-dealing". As the majority shareholder has an advantage over the minority shareholders, subordinate company fails to express their true meaning. Due to the lack of real meaning of subordinate company, majority shareholder can often control the transactions unilaterally, forcing its affiliated company to receive unfair dealing, and therefore transferring subordinate company'assets. Subordinate company is treated as the tool of making profit. Reducing the subordinate company'assets seriously damages the interests of minority shareholders. Because the legal status between the majority shareholders and the minority shareholders originally is equal, of course they should receive a fair return. However the abuse of the right of majority shareholder leads to seriously breach the principles of fairness and justice. For this reason, countries are committed to impose the fiduciary duties on the majority shareholders towards the subordinate company and the minority shareholders, by the company law, case, and doctrine, restricting majority shareholders from obtaining benefits through jeopardizing the interests of minority shareholders.The structure of the modern company is based on the principle of the separation of ownership and management. On the circumstances of the extremely decentralized shares, the company'power is usually concentrated in the hands of directors and managers, and easily is abused, so that we should put restriction on majority shareholders by imposing fiduciary duty and obligation to protect minority shareholders. However, on the circumstances of concentrated stock, majority shareholders tend to abuse controlling power. Therefore they should be the target of the restriction of the law. In China, the concentration of the stake in the company is serious, and majority shareholder are universal. Therefore, it is necessary to impose fiduciary duty on majority shareholders for the purpose of curbing abuse of controlling power. Conferring on the controlling shareholders the fiduciary duties towards the minority shareholders may, to some extent, limits the freedom of management of those controlling shareholders, but it does not confront with the efficiency principle. In fact, the fiduciary duties of controlling shareholders are not against all selfish conducts of the controlling shareholders, but only those transactions of transferring the Interests of minority shareholders to their own through the abuse of controlling right. On the contrary, limiting the controlling power of majority shareholder will promote the efficiency principle in the end. In short, on the one hand, the law allows these transactions; on the other hand, controlling shareholders must bear certain fiduciary duty and responsibility in order to protect the interests of minority shareholders.The Company Law of china only formulates the concept of the fiduciary duty of controlling shareholder in the first time .But the duty and responsibility of majority shareholder isn't specified. Confront with the endless abuse of controlling power of majority shareholder of listed company, China should learn foreign experience to perfect our legislation on fiduciary duty, to specify the fair trade obligations of majority shareholder in particular, therefore facilitating the operation of the judiciary and protecting minority shareholders better.