The Legal Regulation Research On Controlling Shareholder’s Related Dealing

As the modern company’s development, the concept of controlling shareholderwas aroused. There is now widespread among all types of companies. As theprevalence of controlling shareholder is everywhere, the related deals betweencontrolling shareholders and the companies is also inevitable. Include its holdingcompany transactions and the transaction that between controlling shareholder and itssubsidiaries, the performance is variable. The advantage on controlling shareholder’srelated transaction with the company is that they can reduce the transaction’s cost andimprove transaction efficiency. The negative side is that the related transaction maydemote business capacity and sacrifices the principle of fairness. In order to give fullplay to its advantage, the related transaction must be regulated by the law. Byreferring to foreign legislative model to improve our own country’s system oncontrolling shareholder’s related dealing. This paper is divided into four parts, themain contents include:The first part is mainly introducing the conception of controlling shareholder’srelated dealing. By defining the concept’s connotation and extension of controllingshareholder and related dealing, explained the legal characteristic of controllingshareholder’s related transactions systematically, prepare for illustrating furtherinformation on the regulation.The second part mainly analysis the needs on regulation about the controllingshareholder’s related transaction. Despite the existence of controlling shareholder’srelated transaction is reasonable, its disadvantages also need regulation. Controllingshareholder’s related transaction drawbacks in the following areas: fabrication ofinformation, disrupting the market adjustment mechanism; unfair dealings maydamage the company’s interests, small shareholder’s interests and the interests ofstakeholders; related transactions in a legal form may mask the unlawful purpose.Combined with the present shareholding structure of our own country shows that ourcountry‘s company is a typical centralized ownership structure. On the condition thatlegal regulation system is not completely, the controlling shareholders’ relateddealings are likely to damage company and minority shareholders’ interest. Byexamining the controlling shareholder’s related transaction of listed companies in recent years, reflecting the universality of the unfair dealings, in order to illustrate thenecessary of regulating controlling shareholder related-party transactions.The third part mainly discusses the current legal system’s disadvantage forcontrolling shareholder’s related dealing. Current legal system for controllingshareholders related have mentioned by several laws, but there is still inadequate,mainly reflected in three areas: company law has some lacks of institutional design onregulating the controlling shareholder’s related dealings; regulation is not a strongoperational system; the regulation’s outreach is too narrow and lack of system.The forth part proposed some proposals on regulating the controllingshareholder’s related dealings. Mainly from examining controlling shareholder’stransactions in early stage, monitoring the related transactions process, completinglegal remedies after the transactions, by these three stages to complete the system.