Controlling Shareholder Abuse Of Control Over The Legal Regulation

Following the process of China economic reform, the social marketing economy has been established and completed, the GDP as well as people's living standard has been promoted, and the rapid growth in economy has been witnessed by the whole world. As one of the key important part of the marketing economy system, company plays its vital function in the society. Since the history of the establishment of the social marketing economy system is still short, there are lots of problems especially concerning company affairs in the course, which need to be regulated and solved. One of the sever problem is the controlling shareholders who are capable of influencing the policy of the company, abuses their controlling power. If this syndrome couldn't be prohibited, it will jeopardize the interests of the other shareholders especially the small shareholders, and causes the instability of the marketing system as well as the absence of fiduciary duty.Actually, the abuse of controlling power does not solely exist in China, it appears all around the world. The ever stipulated regulations and ruled cases show the efforts of posing obligations on the controlling shareholders. As to different regulating methods, the legislations and ruled cases can be defined as direct and indirect models. Resulting from the special society situation and the present legislation status of China, we believe the direct model shall be applied to China, because it treats thecontrolling shareholders as the actors in the company law that will make it more effective to regulate the abuse of controlling power.The restrictive mechanism against the controlling shareholder concerns many aspects of the society, such as law, economy, politics etc. As to the law aspect, we think a complete set of restrictive mechanism must be established internally and externally. The internal restrictive mechanism means to complete the relevant principle of the controlling shareholders' fiduciary duty, so as to make the controlling shareholders to behave themselves. The external restrictive mechanism means to facilitate the relevant regulations and law of China, which makes the expense of breach of the law is too high to be afforded.In accordance with the above considerations, this paper is divided into six parts to discuss the questions below respectively:Chapter one General Introduction. The background and significance of subject selection, briefing of the cutting-edge studies, and the proper study methods will be introduced in this chapter.Chapter two Distinction of the controlling shareholder and relevant concepts. Although the abuse of controlling power is significantly noticed in China, the basic concept of controlling shareholder is still explained variously. As the ground chapter of the paper, the concept of the controlling shareholder will be studied, compared with the similar concepts here, in order to clarify the fundamental point of the writer. Andthe present legislative status to the controlling shareholder will be summarized at the end of this chapter.Chapter three A survey to the abuse of controlling power in China. The short history of the establishment of the Chinese marketing system as well as the special society situation in China is the reason why the abuse of controlling power happens so often. So in this chapter, the appearances of abuse of controlling power and its reason will be analyzed.Chapter four The internal restrictive mechanism. According to the study in the foresaid two chapters, the resolution will be proposed in this chapter. To restraint the abuse of controlling power, the controlling shareholders' sense of observing the law shall be enhanced. So the fiduciary duty which exceeds the common shareholder bears shall be posed on the controlling shareholders, to make the controlling power exercised both lawfully and reasonably. In this chapter, the fiduciary duty of the controlling shareholder will be expounded.Chapter five The external restrictive mechanism. The interests of the controlling shareholders are not always in accordance with the interests of the company. Therefore, there are always some controlling shareholders may breach the fiduciary duty by the temptation of the interests. At this moment, a strongly held regulation will be needed to restraint the misconduct of the controlling shareholders externally. This is the key point of this chapter.Chapter six conclusion. The whole content will be concluded to result to the complete restrictive mechanism of resolution of abuse of the controlling power.