Controlling Shareholder Fiduciary Duty

According to traditional theories of corporation law, the shareholders don't bear any responsibility apart from providing funds ; even if the shareholders considered the shareholder only bear in mind personal profit when exercising their voting power, it cannot be seen as a violation of the law. If controlling shareholder abuses the majority rule, it will do harm to minority shareholder' interest. Because the abuse of controlling power by the controlling shareholders is covered up by the corporate entity, usually not visible, and also because the main actors concerned by traditional corporation law are the directors, supervisors and other company managers, it is therefore hard to restrain efficiently controlling shareholders who don't assume any function in the company but who in substance exercise great influence on it. This is why it is primordial to acknowledge a new legal countermeasure that would be able to constrain the controlling shareholders who pull the strings behind the scene while avoiding all responsibilities.In order to solve the problem how to limit the abuse of power by the controlling shareholders, the United Kingdom and the United States as well as other western countries impose the fiduciary duty to the controlling shareholders to protect the company and the minority shareholders' interest. The main reason for this is that the controlling shareholders are in a position to exercise their controlling influence onto the company and the other minority shareholders and making use of this influence to encroach on the company and the minority shareholder' interest, justifying they should be restrained by corporation law according to the principle of equal rights and responsibilities. The fiduciary duty of controlling shareholders is about considering the company and the minority shareholders' interest too, not just their own. The duty requires that the controlling shareholders do net abuse of their superior position in pursuing their own interest and that they consider with self-restraint their profit in case of conflicts with the company and the minority shareholders, otherwise infringing the duty itself. The substances of fiduciary duty are duty of care and duty of loyalty.The research is about the definition, content and theoretical basis of fiduciary duty ofcontrolling shareholders, the consequences of the violations of such fiduciary duty, countermeasures to guard against the abuse of controlling power by the controlling shareholders, as well as its overall necessity. To establish the institution of fiduciary duty of controlling shareholders will be favorable not only to solve internal company problems and conflicts of interest, but also to improve corporation governance.