To Prevent The Litigation Of Shareholder Abuse On Behalf Of Legal Thinking

Representative suit, which is also called derivative suit, is an action brought by one or more shareholders to remedy a wrong to the corporation, when the corporation is negligent of the litigation. In a representative suit, the plaintiff shareholder do not sue on a cause of action belonging to themselves as individuals, but sue in a representative capacity on a cause of action which belongs to the corporation. There are some reasons for the corporation which is not willing to sue: the controlling power (i.e. director, officer, majority shareholder) is responsible for the damages to the company; or the third party who should bear the damages to the company has a good relationship with the controlling power. The representative suit is a useful method to protect the lawful rights and interests of minority shareholder and promote a good governance of corporation. Thus it has been acknowledged by corporation legislation of many countries. The new company law of People's Republic of China has brought in such kind of suit. However the regulations of representative suit are very simple. The requirement for the plaintiff shareholder to initiate the suit is not reasonable enough, so it faces the risk of being abused. The writer really hopes to provide some effective proposals and suggestions on how to prevent the explosion of strike suit to promote the well establish the representative suit legal system. This paper is divided into three parts.The first part—the brief introduction of the strike suit. Mainly introduces the definition of representative suit, and the significant sense of it. Makes definition of strike suit, analyzes the nature of it. Presents the different kinds of strike suit, one is brought at the instigation of entrepreneurial attorney; the other is bought owning to the illegal intention of shareholder. Specializes the bad influences of the strike suit towards the juridical resources, the corporation and the other shareholder except the plaintiff one .The second part—the theoretic evidences for the prevention of...