Shareholders Derivative Action Applies To The Study Of Practice

In October 27, 2005, the 18th meeting of NPC Standing Committee adopted the "Company Law of the People's Republic of China" (hereinafter referred to as the "New Company Law"), and many new legal systems were established initally, shareholder derivative litigation is one of them. As a genius invention of the common law countries, the shareholder derivative litigation breaks through in the general principles of the traditional company law, and provides an important path between the judicial power and the corporate governance.No doubt the legislation of shareholder derivative litigation will improve the corporate governance, however, like any other systems created by the human being, the aims and the results are not always the same. When the judicial power intervenes into the corporate governance by the shareholder derivative litigation, the autonomous right of company will inevitably be impacted. So many experiences from the foreign countries proved that shareholder derivative litigation just like a "double-edged sword" from its birth date. It can become the Sword of Damocles hanging over the directors, managers and controlling shareholders, and also may open a Pandora's Box for some people with ulterior motives to abuse their right. Limited by the legislative conditions and techniques, in the new company law, the articles of this system are in principle. So with the enforcement of the new company law, there will be many variety of problems. As a result, the significance how to maximize the active role of the system in an established legislative framework, so that the intention of legislators can be achieved in reality, is not minor than the system establishment.The purpose of writing this paper is that through the researches on the shareholder derivative litigation theory, to explore the balance point between the company autonomous right and the judicial power, and try to find the judicial review standards in the future practice. In the first part, after making a brief of the shareholder derivative litigation definition, history and the relationship with the corporate governance, this article focuses on the role of judicial power in improving corporate governance. And then, the second part of this article expounds the two major principles to determine the relationship between the justice and the corporate governance, such as moderate intervention principle and interests balance principle. After discussing the restrictions of the plaintiff eligibility, as well as the pre-litigation proceedings, the third part of this article explains the proceeding methods to balance the company autonomous right and the judicial power. The fourth part of this article elucidates how to make a judgment to the infringement by the application of the fiduciary duties and business judgment rule, and so that maintain the balance between the company autonomous right and the judicial power. In the light of the above analyses and expatiation, it has been finally concluded in this article that the only purpose for the judicial intervention, through the shareholder derivative litigation, is to make the company autonomy be achieved. Therefore, while the legislative framework can not be reconstituted in a short-term, in the process of the shareholder derivative litigation, we should avoid the judicial power interventing and restricting the company autonomous right excessively, and maintain the balance of two sides.