On Shareholders' Representative Action Filed Its Legal Regulation

As a law system, Shareholders' Representative Action can prevent directors and senior management abusing of authority and injuring the minority stockholders' lawful right. Shareholders' Representative Action comes from common law in England and America and it develops with case law. It's very important to protect the stockholders right and perfect the managing structure of the corporation. The thesis includes three parts. The first part expatiates on the basic meaning and characteristics of the Shareholders' Representative Action mention right. The second part illustrates the Shareholders' Representative Action mention right's quality and jurisprudential foundation. In the end the author introduces its legal regulation situation in China and according to the disadvantages,the author puts forward some perfect proposals.The thesis points out that the Shareholders' Representative Action mention right means when corporation refuses or not willing to ascertain the duties and liabilities of members in corporation or the third party, the shareholders who have the lawful qualification have the right to sue for the corporation's benefit according to the lawful process. One of the right's basic premise is tortfeasor such as directors, controlling shareholders, senior managing officers have fault and these tortfeasors are controlling the corporation. Shareholders' Representative Action have the double feature of subrogation and representative suits; the effect of judgment made by judicial institutions have a direct effect on the corporation, but not the shareholders. The thesis summarizes several features of Shareholders' Representative Action mention right from above three aspects. The author thinks the right is one of the overall profit rights but not one of the own profit rights. The author also thinks that it is not very important for the suit right to different the minority shareholder's rights from the independent shareholder's rights. The author analyses the right's jurisprudential foundation from the substantive law and make a conclusion, that is, the shareholders' right of representative action is based on the membership's right. The author also analyzes the right's jurisprudential foundation from the procedural law and offers an opinion that it is reasonable to take the general theory of parties and the action undertake theory as the jurisprudential foundation on procedural law. In the end, the paper introduces its legal regulation situation in China and compares the regulation with that of the other country or area. Because of the Shareholders' Representative Action's feature of abusing, the author puts forward some suggestions to perfect the system from five facts, including litigation expenses guarantee, litigation expenses compensation, sue motivation, obligation of proof, legal responsibility of lost shareholder and litigation expenses.