On The Legal Regulation Of The Abuse Of Control Rights Of The Controlling Shareholder Of Listed Companies In China

As a basic concept of modern corporations, the controlling shareholders play an important role in the development of the entire firm. Based on the corporation control, the controlling shareholders enjoy the company’s major decision-making, management and distribution of benefits. When the controlling shareholders exercise their rights reasonably, which is protected and encouraged by law,through effective supervision and management, improve corporate governance, the company can maximize its profit, as a result, all the shareholders benefit. However, when the controlling shareholders exercise their rights beyond the legal limits, they gain private benefits at the expense of impairing the listed companies’or other shareholders’ rights and interests. So it’s necessary to be regulated by law.The controlling shareholders are regarded as the focus of legal regulation all over the world, including China. Under the special economic system, listed company’s ownership structure of our country has the characteristic of high concentration. A large number of the controlling shareholders exist in the company, especially in listed corporation. The twentieth item in China’s Company Law has the clear-cut regulation that shareholders shall not abuse their rights. The controlling shareholders of listed company shall not abuse their right, which is taken for granted. The provisions of the nineteenth item in China’s Code of Corporate Governance for Listed Companies prescribes that the controlling shareholders owe a duty of good faith toward the listed company and other shareholders, it also including the regulations of the specific behavior of controlling shareholders, such as related party transactions, information disclosure and so on. In addition, there are a large number of laws and regulations for the relief of the victims, including the company and the minority shareholders. Relatively speaking, China has formed a certain system to regulate the behavior of abusing by listed companies’ controlling shareholders. But there are many deficiencies in the current system, such as the principle of conflict, the provision of the specific behavior is not perfect, legal liability form lacks diversity, the relief for minority shareholders is insufficient. The deficiencies contribute to the abusing behavior of the controlling shareholders, disappoint the minority shareholders’ investment enthusiasm, also damage the healthy development of China’s capital market. Therefore, it’s urgent to find countermeasures to solve these problems.This paper starts with the controlling shareholders of listed corporation and the basic theories of controlling shareholders abuse their rights. After analyzing of the controlling shareholders’ behavior of abusing, and its reasons, harms, theoretical basis. Combing with the current laws and regulations of listed companies’ controlling shareholders abuse their rights, we can find out the problems in the laws and regulations. Based on the study of foreign legislation and practice, the paper puts forward some countermeasures to improve the system, which prevent the controlling shareholders of listed corporation from abusing their right of control.