On The Related Trade And Its Legal Regulations

Related party transaction means a transaction in which resource or liabilitiesare transferred between related parties, weather or not it involves anyconsideration. A related party transaction may have many positive effects tocompany business, while it also produce some negative impacts, and thenegative effects they have should not be disregarded. And the balance system iscreated between positive factors and negative factors of related transaction todirect the related transaction correctly. Considering the key role which thecompany law has been played in our economy, the article will research thecompany law adjustment to the related transactions from the standpoint of civiland commercial law.This dissertation is separated into four chapters to proceed discussing.Part one focuses on the basic theories about related party transactions. Firstthe author gives out the definition of related party transactions. And then, throughthe comparision of legislations of various countries, the author explains theassessing standards and the scope of related parties. After that the authorelaborated the legal characteristic of the related party transaction.Related party transaction is in the modern economic activity the inevitableeconomic phenomena, in the modern market economy, the related partytransaction universal existence, has its profound history and the systembackground. The second part has analyzed the reasons of the related partytransactions: lowering the bargain cost, saving time and operation efficiency.obtaining the performance of the scale economy, regulating the company profitsthrough the connection bargain. In addition, the related transaction still has thedeep reason of system including the tie of the long-term planned economysystem, personality independent principle of the traditional company system andthe shareholder limited liabilities and the defective supervision system and dintsupervision.Related party transaction itself is one kind of neutral behavior. In transactionboth sides is under the connection side different with joint forces function, it possibly has the advantages two kind of possibilities. Through the related trade,enterprises can reduce their transaction cost, improve their operation benefits andprofit ability, expand their business scale, and improve their market competitivepower. But the related party transaction also has the malpractice: cause state assetdraining, reduce national tax revenue and cause harms to tax collection, threatenthe lawful interests of investors and creditors, bring harms to horizontalcompetitors. Finally, through the analysis of the advantages and disadvantages ofhe related party transactions, the author research a conclusion that it is necessaryto standardize related party transaction.We should regulate related partytransactions not but prohibit it.The Company Law roles and regulations on correlated trading must, whentransplanting the legal systems of economically developed countries and regions,adapt to the needs of economic growth in China and respect the traditions andhabits of China. The newly-amended company law has many prescriptions onthe regulation of associated deal, which is a major breakthrough. However, suchprescriptions lack of system aticness, definiteness and completeness and need tobe further perfected.In conclusion, the related party transaction is an ineluctable economicphenomenon. We should have the right eyes on it and take it into the reasonablelaw system. At the same time, we should regulate the connected transaction morereasonably, so that it can seek the interests for the people more effectively andmake great contribution to the construction of the socialism market economy. Bythe studies of this paper, this author hopes that by ways of rational regulation, wecan achieve the purpose of making best use of the advantages of affiliatetransactions and bypassing their disadvantages, and then promote the health andstable development of socialist market economy.