On Controlling Shareholder Transactions Related Legal Regulations

With the development of the market economy and the improvement of economic cooperation,the connected transactions of Company are increasing. Though there is a paper about "connected relationship" in Chinese Company Law,it not directly to clarify the concept of "connected transaction".And the concept of "connected transactions"is referring to some low level of normative legal documents. Theoretically, the connected transaction is a neutral concept. It is a kind of complex economic phenomenon, which has certain inevitability and rationality. Based on the features of connected transaction, the attitude of law should be on its disadvantages, combat the the disadvantages of unfair connected transaction, give a full play to the superiority of the fair connected transaction.We often ignore the interests caused by large shareholders control damage relief rules because of the enthusiasm for "the board of directors center doctrine",and it increases the controlling shareholders abuse power to infringe on the company and the possibility of small shareholders’ interests.Unfair connected transaction which controlling shareholders abuse their control of the great threat to the interests of the minority shareholders and the company.Therefore,modern company theory and legislation gradually established the controlling shareholders’fiduciary duty. On the other hand,the special national conditions led to the highly centralized equity phenomenon. Combined with the corporate governance structure is imperfect.In our country, the Company Law should focus on the controlling shareholders’ connected transaction.On the logical order,the controlling shareholders’ connected transaction should follow the regulation mechanism of the "prevention-afterwards relief path." Prevention mechanism mainly refers to the corresponding process control, including control shareholders affiliate transaction information disclosure system.And afterwards relief mechanism mainly contains the corresponding litigation arrangements, objection shareholder buyback system of right of claim. When the minority shareholders sue, it requires the court to determine the effectiveness of the controlling shareholders’ connected transactions.Finally,if the controlling shareholders’ connected transaction is sentenced illegal,the court will negate its effectiveness.