Control Company Law Protection Of Shareholder Related Transactions

Related transaction by controlling shareholder has become animportant subject in the field of corporate law. There are many reasonsfor it. Firstly, from the jurisprudence perspective, keeping human dignityis the final objective of law, including freedom and equity. Therefore,every shareholder is entitled right. Protection for minority stockholderswould embody respect of law. Besides, law should have just system tosave minority stockholders, instead of making them quitting. Secondly,from the corporate law perspective, maximizing the interests ofstockholder is not a sole objective. Corporate law should also balance theinterests of stakeholders. For example, it is easy for controllingshareholder to make decision to do connected transaction, which helpshim to gain individual benefit but ignore minority shareholders'. However,corporate law will correct these unequal things to balance the interests ofstakeholders. Another reason for corporate law protection comes form thechange of modern society. Legal entity and limited liability wereimportant characteristic for traditional society, when there had not manyaffiliated corporate. However, both of them should change now becauseof the emergence of corporate groups. Controlling company hurts theindependence of other affiliated companies by management and order.Affiliated company loses the individual property among insidertransaction Thus, affiliated company is not a legal entity in the absent ofpersonality and property. As the result, limiter liability should also bechange, otherwise, it would harm for stakeholders. The thesis tries to find some useful suggestion through comparingand analyzing related systems of foreign countries or region. Germanydistinguishes contractual affiliation corporate from non-contract one inthe light of emergence basis. For the contractual one, the independence ofcompany is lost legally because of contract. So all the connectedtransaction are permitted. For the non-contractual one, controllingcompany must compensate others. America protect stakeholders on thebasis of controlling stockholders' fiduciary duty, piercing the corporateveil doctrine and equitable subordination doctrine. Corporate law ofTaiwan region is affected by both Germany and America. Related systemsof foreign countries or region have many differences. Firstly, they havedifferent doctrine. German law alters legal entity and limited liabilitydoctrine of traditional corporate law. So controlling company can giveaffiliated one order, even it is only beneficial for himself. While the lawof America and Taiwan region keep legal entity and limited liabilitydoctrine, except for some conditions. When it's connected with process ofcorporate law, China may be traditional one, it could not ignore legalentity and limited liability doctrine. It would better give them exception.Legal pattern is the second one. German law distinguishes contractualaffiliation corporate from non-contract one and focuses on contractualone. While the law of America and Taiwan region don't regulate it. In fact,most Chinese company are connected by stock. It's no need for us toregulate two kinds. Thirdly, German law is logical and systematic, whichtells when and how to protect stakeholders detailed, comparing withAmerican law. Lastly, they have difference in legal application. Chinese corporate law has no direct provision related with protectionfor stakeholders during connected transaction But we can find someprovisions from other regulations, for instance, consent of shareholders'board, restrictions on voting rights and fiduciary duty of controllingstockholder. With the consent of shareholders' board, insider trading canbe open and supervised. While the broad of directors replaces to consentin resent regulation, which could not keep procedural justice. Restrictionson voting rights aims to balance the interests of company, stockholdersand stakeholders, avoiding abuse of voting rights by controllingstockholders However, some provisions are not clear. They don't say howto do if decision is made without restri...