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On Joint-stock Companies Control The Shareholders' Fiduciary Duties To Minority Shareholders

Posted on:2005-12-01Degree:MasterType:Thesis
Country:ChinaCandidate:J P ChengFull Text:PDF
GTID:2206360122986103Subject:Civil and Commercial Law
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In modern corporations, "the majority rule" is an important rule of corporation governance. It can't be denied that the majority rule plays a important positive role during the course of corporation development. However, if controlling shareholder abuses the majority rule, it will happen "tyranny of majority capital", and will do harm to minority shareholders' interest.Controlling shareholders have strong powers of controlling and commanding to corporation matters which the minorities can not have forever, and sometimes they can even control directors and managers. Today, it can be said to some extent that corporation General Meeting exists in name only. In this circumstance, controlling shareholder can use their powers to pursue their own benefits which perhaps opposite to the interests of corporation and of minority shareholders. It is a great task of corporation governance that how to prohibit controlling shareholders from doing this.In UK and USA, corporation law provided that controlling shareholder should bear fiduciary duty to minorities, the substancesof fiduciary duty are duty of care and duty of loyalty. The fiduciary duty of controlling shareholder is different from that of directors. As for the former, duty of care will be happened only in the sale of control, and the duty of loyalty , which prohibit controlling shareholder from oppression on minority, insider-trading, self-dealing and usurping corporation chance, is the crux of controlling shareholders' fiduciary duty.Once controlling shareholdensbreach his fiduciary duty, the common law provides minorities the rights of direct suit and derivative suit. Then, the minorities can request the court to order the controlling shareholder responsible for the damages, or to make an injunction, or to declare the corporation decision void. And the minorities can also exercise their appraisal right of dissenting shareholders. During this procedure, they could show the dissent opinions in the general meeting and withdraw from the corporation after their share had be purchased or compensated.The Corporation Law provides the fiduciary duty on the controlling shareholders and the legal relieves to minorities to balance the interests between them, it is a useful reference to improve Chinese corporation governance.
Keywords/Search Tags:joint-stock company, controlling shareholders, fiduciary duty
PDF Full Text Request
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