On Legal Control Of Private Bank Related Party Transaction Risk

Under the encouragement and guide to National Policy, in order to participating in banking institutions, private capital adopted different forms and even set up a private bank launched by the national capital. Private Banks play roles as catfish effect that at the same time easy to cause the connection transaction risk. This essay based on the theory that empirical analysis, doing research the risk of related party transactions, and to provide legal control paradigm, so as to regulate the behavior of private bank related transactions and protect the rights and interests of stakeholders In the early development of private Banks. The private bank connection transaction risk legal control problem has both theoretical perspective and practical significance.The thesis is divided into four parts as followed.The first part is about the related concept definition of private bank connection transaction legal risk control. Concrete analysis defines the private Banks associated trade, and private Banks associated business risks as well as private Banks trading risk control law. Furthermore, the analysis reveals the essence difference of private Banks and commercial Banks which is the control of private capital. However the essence of correlation is control and significant impact. The specific risk of private Banks associated trade comes from blind profit-driven and interest game are motivation.While legal control is for the balance of equity interests.The second part is the problem of bank connection transaction risk legal control in our country. This essay points out that our country has not set up special control methods to private Banks associated business risks or special rules on regulating the system of the private bank yet. Meanwhile, the definition about related parties is not consistent, clear and perfect. What’s more, The legal definition of associated trading conditions are so principal that connection transaction contract effectiveness lead to the difficult of afterwards relief. The unreasonable connection transaction legal procedures bring about light legal liability and difficult trace. This essay also analysis the relationship between these problems and the reason of generating related party transaction.The third part is related to transactions risk legal control experience abroad. Investigation on the United States, Britain, Germany and China’s Hong Kong, Taiwan area show the principle of corporate veil, the principle of shareholder fiduciary duty, and joins system that are so advanced that adopted into bank related party transactions. There are some effective ways to deal with illegal behavior of trading transaction such as specification conditions and perfect internal control mechanism, applies a system of information disclosure, strengthen the external supervision.The forth part is the legal countermeasure to control the private Banks associated business risks in China. Now that realizing the problem of legal control in our country, this essay proposes six legal countermeasures based on the experience abroad and other special areas in China. Firstly, the legal system to private bank related transactions should be completed. The legal definition to relate party transaction and the voting avoid system on unlisted companies should be added in company law. The disregard of corporate personality system should be refined. Integration of formulating unified associated business of commercial bank management method is also necessary. Furthermore, the special normative documents provides judicial guarantee. Secondly, the structure of corporate governance in private bank must be soundness. To achieve that, relatively centralized and decentralized equity structure could be adopted to check and balance independent directors and external supervision. In this way, insiders can be motivated and restricted and function of restraint reveals. Internal checks and balances could strengthen the control ability of associated business risks. On one hand, the supervising of private bank related transactions should be expanded by follow steps. Shareholders need to be strictly admitted into regulation system and prudent supervise the connection transaction behavior. They must assure the drop out of risk management and recovery plan. At the mean time, they need to share information with relevant departments and do linkage coordination. On the other hand, it is important to implement information disclosure and reporting system. Because only in this way can external pressure be formed. The last but not least, the government takes charge for relieving and interests in equity. Tracing legal liability helps the formation of an entire system which link civil liability, administrative responsibility and criminal liability.