Shareholder Representative Litigation System Research

In the year2005, the new company law was promulgated after a second revision, which established a number of new systems compared to its previous edition, among which the introduction of the system of Shareholder's Representative Action was one of the most impressive breakthrough. The system of Shareholder's Representative Action was established on the base of listening to a wide range of social opinions, adopting the latest academic achievements in the fields of company laws and referring to the foreign instances of legislation, and would offer a supplementary remedy to the current laws in the issue of protecting the benefit of the company and its minority stockholders. While on the other hand, we should learn this newly generated system of litigation was far from complete, few rules can be seen in the interpretation of the company laws even it had already published its third composition, and no evidence shows such rules could be brought out in the foreseeable future, which situation all make the courts have no way but to accumulate relevant experiences case by case. Based on the practical experiences of the author during the trialing of such cases, this paper will discuss the practical rules of the current system of the Shareholder's Representative Action and make several reasonable suggestions, including how to determine the qualification of the litigants, whether there is practical possibility for the company and other shareholders to enter into the suit, how to prevent the abuse of the litigation right, and other concrete issues such as the determination of the cause of the action, jurisdictional issues, the allocation of the burden of proof, available methods for the defendant to assume its liabilities, etc.