On Shareholders' Representative Action

Shareholders representative suit is a contradiction solution mechanism and a unique judicial remedy way for guaranteeing shareholders' right, it also called "stockholders derivative action", it is a action forms that shareholders sue the company for a lawsuit in his own name and compensation belongs to company when the interests of the company is infringed but the company refuses or is remiss to exercise litigation rights. Shareholders Representative suit institutes by shareholders when the interests of the company is infringed, so it is not apply to the period before founding and entering liquidation. In judicial practice, first, it should make clear that the cause of action, which includes the directors executives of the company have violated laws,administrative regulations or the articles of association of the company, or the directors,supervisors,executives violates laws,administrative regulations or the articles of association of the company during the course of performing his duties and shall be liable for compensation, or the directors, supervisors and executives are delayed in exercising their duties and the company can not promptly investigate for legal responsibility according to law; Second, the defendants of shareholders representative suit should focus on the directors,supervisors and executives, etc; Third, the settlement and withdraw of shareholders representative suit must be strictly examinated by the Judiciary; Fourth, pre-procedure of shareholders representative suit must be defined; Fifth, suggesting that to defer the litigation guarantee system according to the current situation of our country; Sixth, involving Shareholders representative suit, board of directors has more understanding about the specific situations, shareholders maybe do not know clearly, besides violations are often due to directors fail to perform their duties, so they may conceal and hide evidence, maybe we can consider using "shifting of burden of evidence" based on " the situation that shareholders as the plaintiff are difficult in giving proof; Seventh, the limitation of action of shareholders representative suit shall be specially stipulated, and beginning from the preceding procedure can protect the interests of the company and shareholders, and meanwhile can restrict " Lawsuit abuse "; Eighth, the company is not certainly become parties of shareholders representative suit, under the circumstances company has right to decide whether to participate in litigation or not, if company participates in litigation, the company should be considered as co-plaintiffs, and it should regard as necessary joinder because of the efect of suing is attached to company and other shareholders.