On Corporation Law Regulations Of Controlling Shareholders’Affiliated Transaction

The senior management personnel which represent the Controlling shareholders have the duty of care and faithful obligations because of their relationship with the company In China, the main unjust related transactions form is the related party transactions conducted by controlling shareholders. Compared with director affiliate transaction, the controlling shareholders’related transaction has more serious illegal problems, the background and reason is very complex, thus the difficulty in legal solving also is harder. Compared with foreign similar legal issues, our regulation’s emphasis and difficulty related to transactions are not on related party transactions by controlling shareholders. The reason why unfair transaction by controlling shareholders becomes the focus is related to the equity structure and governance structure of company. Although the empirical analysis shows that, from the point of corporate performance and management efficiency, there is not a certain kind of equity structure model which is absolutely good or bad, but we must understand, in equity structure mode, the controlling shareholders in the company management structure has its legitimacy rationality and necessity. The controlling shareholders actively participating in corporate governance at shareholder protection laws is a subprime choice, or a substitute for the lack of legal protection for shareholder, it has great advantage in supervision and operators in low cost, high efficiency in decision-making. But on the other hand, the operation of controlling shareholder, indeed provide convenience to the controlling shareholder to manipulate company, which also challenge the construction of company law. In centralized equity structure, company has to face contradictions which are different from the structure of dispersed ownership. As sharp observers pointed out, in most countries’big company, because of the large internal relatively concentrated of stock right structure, the fundamental agency problems cause conflict of interest between outside investors and controlling shareholders who almost control managers completely.Therefore, under the centralized equity structure of corporate governance, the center problem is how to supervise controlling shareholders in practice to satisfy the interest of external investors (minority shareholders and creditors)Although our countries’centralized equity structure model form is not the result of long-term choice of market, but the government’s system design, however, the goal of company law in China is not to establish dispersed-ownership company, but to establish company with centralized equity structure, and this trend never changed. Under the background of this market, solving unjust related transaction become a inevitable logic, we must increase the system cost for the operation which is conducted by controlling shareholders. And company law is the most direct effect means to regulate controlling shareholders with fewest costs.