On The Regulation Of Related Party Transactions Of Listed Companies Controlling Shareholder

Related transactions are theoretically a neutral word, which are complex economic phenomena between the listed company and its affiliated parties. Related transactions are not market behavior only, but also lie outside the area of insider trading, with generation of a certain degree of inevitability and rationality. The concept of"related transactions"is not specified in the current Company Law of China directly, only with the description of"related relationship". This article mainly focuses on related transactions by controlling shareholders of listed companies, as most of the related transactions occur at listed companies, which are relatively complicated. What's more, except the Company Law, the relevant regulations regarding related transactions are referred in the relevant rules issued by CSRC and rules regarding listed companies adjustments issued by Shanghai and Shenzhen Stock Exchange.Related transactions by the controlling shareholders of listed companies shall be divided into two aspects, general related transactions by the controlling shareholders of listed companies and unfair related transactions by the controlling shareholders of listed companies. This article mainly focuses on the unfair related transactions by the controlling shareholders of listed companies. Coase, American economist pointed out in "Nature of the Firm", the firm is a substitute of price mechanism, the internal motivation of the substitution of enterprise organization by market organization is the transaction cost saving. The appearance and development of related transactions with the function of decrease the transactions coast leads to the substitution and abandon of single institution by the corporate group. Objectively speaking, the related transactions between listed companies and its affiliated parties do bring some advantages which cannot obtained from the general market transactions, such as decreasing the transaction risks, to save transaction cost, to enhance the operation efficiency and profitability capacity and to optimize the capital structure and internal resource allocation. What's more, through the internal transaction arrangements by the corporate group, the market competitive capability is enhanced overall, which is good for the profit maximization of the corporate group while is good for the realization of the overall strategy of the corporate group. Lots related transactions disclosure can be searched by website, all of which are based on kindness, integrity and fairness. Every coin has two sides. The two parties of the transaction are two individuals, driving by the interest, there are some bad aspects of the related transactions. The related transactions are transactions between the affiliated parties, the interest conflicts can not be avoided, which harm the benefits of the company. In the stock market, there are lots unfair related transactions aimed to varnish performance, transfer profits or evade law with worsening trend day by day. The economy of China is in the process of transformation, the final goal of the economy development of China is to establish the perfect the socialist market economy system. Competitiveness is the substantive characteristics of the market economy. Fair competitiveness is the requirements of the competitive system. Regarding the related transactions of the listed company, the listed companies are controlled by the controlling shareholder, the realistic benefits and long-term benefits cannot be affected. If this persists, from macroscopic angle, the related transactions are not good for the health development of the overall social competitive environment.Therefore, how to regulate the related transactions is the key point of Corporate Law and Securities Law. For the purpose of this article, how to regulate the unfair related transactions between the controlling shareholders and the listed company will be emphasized in this article.PartⅠis about the overview of related transactions by the controlling shareholders, to be discussed from affiliated parties, controlling shareholders and identification of related transactions.PartⅡis about the original source of the unfair related transactions, to be discussed form two aspects-subjective aspects and objective aspects.PartⅢis about the current status of the regulations regarding related transactions by controlling shareholders of listed companies in China, to be discussed from three aspects-the legislation of related transactions,"related transactions"in Corporate Law,"related transactions"in Security Law.PartⅣis about how to avoid"related transactions"by two successful cases, which aims to discuss how to avoid unfair related transactions through consciousness raising and internal system establishment from the microcosmic angle of the listed companies themselves.PartyⅤis about the new measures by the CSRC and the new regulation of Shanghai Stock Exchange, by which to further discuss the effective measures of how to improve the related transactions by controlling shareholders of listed companies. The overall idea of how to improve and regulate the legal system of related transactions, to be discussed from two aspects- legislation of unfair related transactions abroad and at home.