Research On Legal Regulation Of Related Transactions Of Listed Companies

The stock market is the important part of the whole national economy. Its reasonable resource allocation and fair process contributes to the high-efficiency of public companies. Meanwhile, public companies, as the main body of stock market, the great effects on stock market and other related parties point to the necessity of active constraint to public companies’ behaviors. However, along with the diversification of public companies’ trading models, related party transactions are on the increase. The tendency to unfairness, diversification of trading models and information asymmetry increase difficulties in recognizing related party transactions. On the other hand, related party transactions violate consistency of contract, cause the confusion of corporate personality and damage the benefits of creditors and shareholders who hold small and medium shares. Hence, the necessity of constraining related party transactions is soaring.This paper takes the research on related party transactions between public companies as the topic and follows the model of clarifying the basics, analyzing the current situation and problems of domestic related laws, comparing situations of foreign related legal systems and bringing up improving suggestions. Through the process, the problems of current legal situations have been found out and the foreign legislative experience and domestic situations are combined to give suggestions from the aspects of prevention in advance and afterwards relief measures. This paper aims to improve the legislations of related party transactions, protect benefits of investors and shareholders and maintain the healthy development of stock market.This paper is divided into three chapters. Chapter One clarifies relative definitions of related party transactions. The related party is discussed firstly and then the definition of related party transactions is given by terms of rights and interests as well as the classification on basis of different standards. Through the discussion of the nature and essential features of related party transactions, the necessity of constraining related party transactions are given as the correction of contract consistency principle, the protection of personality independence and the benefits of shareholders and creditors. Chapter Two discusses the current situation and deficiencies of legislation about related party transactions between public companies from the perspectives of corporation law and securities law. The corporation law contain rules about related party relationships, procedures and rights and obligations of shareholders, while the securities law present the rules of information disclosure requirement, normative documents by CSRC and listing rules by stock exchange. The deficiencies can be found as lack of systematicness in rules, beforehand prevention and afterwards relief. Taking legislation of Germany, Taiwan, America and Britain as examples, their relative rules regulating related party transactions can be used as reference for improving domestic legislations on related party transactions. Chapter Three states the suggestions for improving unfair related party transactions of public companies. Referring to foreign legislation experience on the basis of domestic legislation, the beforehand prevention and afterward relief measures are given. Expanding the duty of loyal, improving information disclosure requirement and avoidance system of shareholders’ voting rights are advised to conduct before prevention. Improving shareholders’ lawsuit system, corporate personality independence and establishing contract rights of revocation over unfair related party transactions are suggested to conduct afterward relief for shareholders.