On Company’s Legal Status In China’s Shareholder’s Representative Suit

Shareholder’s representative suit is honored as an ingenious invention, which provides a relief for company and minority shareholders when their interests were infringed upon. It originated in the United Kingdom while developed in the United States. It has been playing a very important role in Common Law countries and has been enacted into statute in some of those countries. It was also introduced by many Civil Law countries. Prior to the2005Company Law, there was a dispute over whether representative suit has already been adopted in China’s1993Company Law, but the majority’s answer to this question was negative. In practice, the number of shareholder’s representative suit cases has been increasing; companies in China are facing serious corporate governance problems. Taking advantage of their dominance power, majority shareholders often infringe on company and minority shareholders’interests; moreover, there are no alternative remedies in China to protect minority shareholders’interests. In order to ensure company and minority shareholders’ interests and to improve the structure of corporate governance, it is urgent that shareholder’s representative suit be introduced into China. To satisfy these needs, shareholder’s representative suit was established in China’s2005Company Law for the first time. It is of great significance to protect company and minority shareholders’ interests and to improve the structure of corporate governance. In shareholder’s representative suit, shareholders file a lawsuit on behalf of the company and therefore, the company is an indispensable party. So it is necessary to provide for company’s legal status in the representative suit. In China’s Company Law, there is no provision about company’s legal status, which leads to the result that company’s legal status varies from case to case, which is against company and minority shareholders’interests. Therefore, the author will discuss company’s legal status in China’s representative suit from the first representative suit case in China and with a comparative method. Based on the conclusion of comparative research and China’s situation, the author will propose legislative suggestions on company’s legal status in China’s representative suit. In this thesis, the topic will be brought up by introducing the first shareholder’s representative suit case, that is, Nanchang District, Wuxi City, real estate operating company, Pudong, Shanghai State-owned Assets Investment Management Ltd. v. Group Co., Ltd. Besides introduction and conclusion, this thesis consists of four chapters discussing company’s legal status in shareholder’s representative suit. Chapter One is about the legislative defect on company’s legal status in China’s representative suit and problems caused by the legislative defect. Chapter Two is about different theories on company’s legal status in the representative suit. The author will analyze scholars’three views on this issue:the United States’ model-company as a nominal defendant, Japan’s model-company as a co-litigant or an assisting party and falling into China’s theory about the third parties. Chapter Three is about legislative comparison on company’s legal status in the representative suit. Referring to stipulation of company’s legal status in the United States’and Japan’s representative suits, the author will analyze what company’s legal status in China’s representative suit should be like. Chapter Four is suggestions for China’s legislation on this issue in the future. Based on the conclusion of comparative research, taking China’s situation into consideration, the author will put forward legislative suggestions on this issue.This thesis mainly makes use of a comparative method and case study. It begins with the first representative suit case in China and refers to stipulation of company’s legal status in the United States’ and Japan’s representative suits to discuss company’s legal status in China’s representative suit, in hope of improving the legislative and judicial practices in China.