A Study On The Legal Regulation Of Controlling Shareholders' Abuse Of Control Rights By Listed Companies

Current controlling shareholders abuse control damage and controlling shareholders of listed companies of intensified, so the definition of controlling shareholders and the abuse of control behavior regulation is particularly necessary. The author believes that the definition of controlling shareholders in the current legal system is vague, at the same time, the behavior laws are weak in the face of the situations that controlling shareholders abuse the control to encroach small and medium-sized shareholders, as well as the listed companies. Consider the circumstance that the interest the controlling shareholders obtain from abusing control is significantly beyond the consequences it brings, the author discusses the concept of controlling shareholders at first, then details the methods how controlling shareholders abuse control item by item, at last, emphatically discusses the construction of the system of restraints for both internal and external controlling shareholders, in order to form a relatively complete logic protection chain.The article is divided into four sections, analyzes the issue that controlling shareholders of the listed companies abuse control according to the progressive way.The first paragraph of the article discriminates the basic concepts of controlling shareholders, the basic forms the controlling shareholders exist and the related similar concepts. First, the chapter defines the concept of controlling shareholders, namely considering the standards examining the definition of controlling shareholders, it should not only be judged from the perspective of form, but also affirmed by the essence of standards, it needs special attention when the shareholder has achieved more than fifty percent shares of the company, but the shareholder is deprived of or has abandoned his or her voting power and hasn’t showed to exercise control, the author thinks the shareholder in this situation also should not be considered as the controlling shareholder; second, lists different forms of the controlling shareholders of listed companies according to the partitioning standards of whether they enjoy the ownership of the companies’ equities, in order to form a set of specific criterion to distinguish the identities of controlling shareholders; third, introduces and affirms the control system, the control system has undeniable advantages, if the control system disappears, there should be a negative impact to the operation of listed companies; fourth, since controlling shareholders and majority shareholder are both similar to the concept of controlling shareholders, a detailed analysis is made on the two terms; fifth, lists the current law provisions on controlling shareholders and analyzes these provisions to elaborate the conflicts that may occur.The second paragraph of the article, first classifies the types of how controlling shareholders abuse control:related party transactions, encroach the company property and feigned investment and financing; then, the paper puts forward the motivation of controlling shareholders abuse control, the author supports the theory of personal interests; moreover, expounds the different kinds of vulnerabilities that cause the abuse of control by controlling shareholders; at last, mainly states what subjects will be damaged by the controlling shareholders abusing control.The third paragraph of the article, uses the Anglo-American equity law as the entry point to brings in the fiduciary duty of controlling shareholders, detailed discusses the emergence and development of the fiduciary duty combined with the American related cases, elaborates the connotation of fiduciary duty taking the perspective of both the object and the content, finally the author intends to improve the evaluation standards of violation of fiduciary duty by controlling shareholders, which means the controlling shareholders must consider the subjective intentions, the behavior patterns and the consequences of acts of controlling shareholders comprehensively when handling matters in the company, it is not accurate to judge the behavior of controlling shareholders from only one aspect. The mechanism is supplemented by shareholder representative litigation system, small and medium-sized shareholders lawsuit system and the liability system of controlling shareholders, these three systems constructs the formation of internal constraints mechanism of controlling shareholders.The fourth part of the article, puts forward proposals to improve the external constraints system of the behavior that controlling shareholders abuse control. The construction of external constraints system refers to the establishment of the substantive regulations and the overall responsibility system related to controlling shareholders, first of all, the structures and equities of listed companies need to be perfected, puts forward the independent director system and the innovation of the board of supervisors; afterwards, proposes the improvement of vote according to the flaws in the voting rights of shareholders of listed companies, and suggests adopting a new cumulative voting system; finally, discusses the construction of overall responsibility system of controlling shareholders, puts forward legislative proposals using civil and criminal liability as the entry point.