Foreign Shareholders On Behalf Of The Litigation System Is A Comparative Study

Shareholders derivative action means that, when the company reject to initiate a litigation holding the company directors, supervisors, senior management, controlling shareholders, the actual control of the company and a third person for the negative obligation or responsibility, the statutorily qualified shareholders initiate a litigation in their own name, but for the interests of the company and sued. Because of this, it is inevitable to involve proper litigation conditions as plaintiff shareholders on behalf of the shareholders, the scope of the defendant, the litigation status of the company and the other shareholders, the rights and the responsibilities of the plaintiff shareholder in the outcome of the legal proceedings and other related issuesAs to the proper litigation conditions for the scope of shareholders as the plaintiff, the common law countries have less restrictions on the plaintiff shareholders, as a result, leading to malicious abuse of litigation initiated by shareholders .on the contrary, the civil law countries have too strict restrictions which hinder the exercise of the litigation rights of small and medium shareholder who really want to protect the interests of the company. So, in order to encourage small and medium shareholders to preserve their own interests and that of the company, the appropriate restrictions on the base of common law regulations is proper.As for the defendant, it is well accepted that it should include the directors, managers and other senior persons in the management. China adopted the broad-based concept of defendant, and regarded the directors, the supervisors, senior managers as the third persons. However, it is reasonable that the concept of the third persona should be expressly limited those who use its influence on the company to order the board of directors to be against the interests of the company and the shareholders.As to the status of the company to participate in the proceedings, American law regulated it as nominal defendant but real plaintiff. British law regarded it as defendant. In Japan it could not participate in the proceeding, if participating, it is a certain party in the litigation. Due to the status, the nature and our present stipulations, the company could be thought as the third person without independent right to request.As for other shareholders who request to participate in the proceedings with the same reasons, if they comply with the conditions of the prosecution at the same time, they should be allowed to participate in its proceedings as co-plaintiffs. But they are unnecessarily have common status in the litigation in the lawsuit of representatives of the shareholders. The plaintiff affords the litigation cost and the risk losing commitment, but the litigation interests are shared by the company and all shareholder. It is obvious that the benefits and the risks lose balance. So, from the angle of encouraging the plaintiff to initiate the litigation, China should adopted the common principle that the successful plaintiff have the rights to get the compensation for legal costs and the right to request to share the interests form the successful litigation, in the meantime, not shoulder the responsibility of compensation for its unsuccessful litigation if not done maliciously.