On The Regulation Of Dormant Shareholders

Corporations are playing growing important roles in the development of ourcountry as the investment field has experienced a prosperous period since the reformof market economy. In such circumstances dormant investment has springed up as asignificant investment method. Dormant shareholders are defined as follows: thoseinvestors who actually make contributions to the corporate with other peopleregistered on the memorandum of association, registration of stockholders andcertification of incorporation. Due to the insufficient legislation, dormant investmenthas raised continuous and serious disputes. Although the Supreme Court issued the“Interpretation of Company law Ш” in2011which is designated to regulate thephenomenon, it is still necessary to design a systemic regulative method to regulatethe problem of dormant shareholders as the legal effect of judicial interpretationremains controversial and the interpretation leaves us many problems.This dissertation conducts a research on the necessity and the designation of theregulative system of the legal regulation of dormant shareholders both from practicaland academic point of view. We should stick to such principles as protecting thesafety of trades, balancing the rights of contractual rights and public interests,preserving the stability of corporation and promoting the efficiency of trades. On theone hand, the legislation should not recognize dormant investors as the shareholdersof the corporation considering the interests of the social benefits.On the other hand, the law should also show full respect to the dormant investment contract subjected tothe principle of autonomy of will and provide the dormant investors with a way tobecome eligible shareholder when it is necessary.The paper consists of three parts as follows: introduction, body andconclusion.The body contains six chapters:Chapter Ⅰis the overview of dormant shareholders. This chapter centers on thedefinition of dormant shareholders by analyzing the characteristics of dormantshareholder and comparing the dormant shareholder with other similar concepts.Chapter Ⅱ includes the reason for the appearance, the value of existence andthe necessity of regulation of dormant shareholders.Chapter Ⅲ compares the current regulation of dormant shareholder at home andabroad. The author points out that the regulatory system in China is far fromsatisfactory although practitioners have made quite a lot of explorations on it.Chapter Ⅳ gives the principles of regulating of the dormantshareholders,laying a foundation for the designation of the regulative system fordormant shareholders.Chapter Ⅴ explores the specific regulatory system of dormant shareholder, inwhich the author discuss the identification of shareholders and legal relationshipamong the dormant shareholder, the registered shareholder and other related parties.Chapter Ⅵ is the advice for the dormant investors. In this chapter the authorsuggest those who attempt to invest in corporation in a dormant way to use the sharetrust which has quite a lot of advances. Bring in the share trust is one of theinnovation and contribution of this dissertation.