How To Achieve The Goal In Regulating The Related Party Transaction Of Listed Companies

As a product of economic development, related party transaction (RPT) prevailsin market at home and abroad. The legislative attitude of any countries has changedfrom severity to the tolerance. The reason is that RPT is a two-edged sword formarket，and companies can benefit from it, or sometimes it brings damages to relevantsubjects. So RPT itself is not forbidden by law, and what the law targets is theprotection of relevant subjects in the market, especially minority stockholders. Withthe development of Chinese capital market and companies, the form of RPT has beenchanging with a more powerful impact on minority stockholders. More than that, itcan make a serious influence on investor confidence and stabilization of the capitalmarket. Based on this, the rules for RPT and the protection of minority stockholdershave grown out of nothing, and a round system is building up, including regulationmeasures on RPT and remedy measures for minority stockholders who suffer thedamages. All the aforementioned measures constitute the comparatively completesystem for the protection under RPT. However, there is no denying that, upon variousrealistic factors, some problems arise during the process of implementing thesemeasures and the legislative intent face challenges, which need to be solved.Chapter I in the paper, on one hand, starting from the case of RPT by ZiXin pharmaceutical company, discusses the damages of multiple generality and weakposition of minority stockholders. On the other hand, as starting-point in the theory,Chapter Ⅰ studies on Concept Definition including “related party” and “transaction” inthe law of different scopes, and analyses the characters.Chapter Ⅱ analyzes the current status. Using empirical analysis method, it firstanalyses typical RPT, including the related-party guarantee, related-party purchaseand sale, usurping corporate opportunities, occupying the capital etc. Concealment isa new development of RPT under the manner of removing the relationship, dividingthe transaction etc. In the context of the combination between typical RPT and newdevelopment, Chapter Ⅱ further studies the direct and indirect damages on minoritystockholders.Chapter Ⅲ analyzes the reasons why minority stockholders have not beenprotected. Through “the actual effect of law” theory, based on the Constraints, itdiscusses the defects of regulation and remedy measures in detail in the process ofimplementation. The former includes the duty of loyalty of directors and dominantstockholder, discounting of shareholders’ votes, information disclosure, and the laterincludes direct and derivative suit. The analysis mainly focuses on its operation andreasons.Chapter Ⅴ, upon the defects and reasons discussed in the Chapter Ⅲ, makesspecific plans on legislative technology and coercive power of state to achieve thelegislative goals. The suggestions emphasize on the law balance, punishment andpreventive measures.