Research On The Conflict And Coordination Between Shareholders’ Rights To Know And Protection Of Company’s Trade Secrets

The conflict between the shareholders’ right to know and the protection of company’s trade secret have been a hotly-discussed topic for the company law study. With the development of economic modernization, information becomes the core of the economic development, and is confronted with different conflicts during its production, transmission and application. Through the theoretical analysis of shareholders’ rights to know and company’s trade secrets, we get to know the conflicts exist both theoretically and practically. Theoretical, the establishment of shareholders’ rights to know do good to the improve the information asymmetry between shareholders and company and its operators, improve the adverse situation of shareholders, in particular, the minority shareholders. The protection of trade secrets aims to protect the legitimate rights and interests of companies thought the recognition of the legality of trade secrets from the perspectives of anti-unfair competition law and prevention of unfair competition by means of infringing the trade secrets. In practice, on one hand, the shareholders’ rights to know targets to effectively protect the rights and interests of shareholders, however, such rights may be taken advantage of by shareholders to seek personal interests. The abuse of such rights ultimately hurts the interests of the company. On the other hand, in order to maintain a competitive edge, the trade secrets are subject to legal protection. However, companies, in many occasions, reject the request raised by shareholders in respect of the shareholders’ rights to know, and hence fails to full protection of the interests of both shareholders and companies. The different value orientations of the two systems lead to the conflicts caused therefrom. In the event that the information obtained by the shareholders is involved in trade secrets, the issue to balance the shareholders’ rights to know and trade secrets then occurs.The conflicts between the shareholders’ rights and trade secrets are manifested as follows:firstly, the conflict of legal ideas; secondly, the conflict of legal principles; third, the conflict of contents. A further research may disclose that the conflict source arises from the conflict of legal values, the oversight of legal provisions and the vague boundaries of powers. To effectively protect the shareholders’ rights to know and trade secrets, a balanced system between the shareholders’ rights to know and trade secrets rather than a unilateral strengthening and protection of either is needed, so as that to reach a balance between both sides by means of the research on conflict and coordination. Such coordination may be carried out by taking the following measures: first to establish the basic principles of coordination, i.e. principles of rights hierarchy and balance of interests. Then, analyze the coordination of the shareholders’ rights to know and trade secrets from the perspectives of both substance and procedures. As for the substance perspective, it can be elaborated by perfecting the shareholders’ rights to know system, determining rightful objective and reasonable cause, perfecting the information disclosure system and shareholders’ confidentiality obligation. As for the procedure perspective, it can be elaborated by regulating the procedure of exercise of the shareholders’ rights to know, establishing the injunction system and examiners system, and to eventually achieve the balance goal between the shareholders’ rights to know and trade secrets.