Theory On Shareholders’ Right To Access Books Of A Limited Liability Company

As a shareholder of a limited liability company，Mr. Zhang says that since thecompany was established, executive director has never convened shareholders’meeting convened and he is ignorant of capital purposes and capital flows during thecompany’s operations. Moreover, he has been repeatedly rejected when he repeatedlyasked the company to provide relevant information on the company’s accounting.Thus, Mr. Zhang sues to the court under the Companies Act on provisions onshareholders’ right to access books for judgment to support their request of right. Thedefendant company lifts the defense that Mr. Zhang’s request will prejudice thecompany’s interests. In view of the relevant provisions of the Act relating toshareholders’ right to access books is not clear enough, several difficult identifiedissues appeared.Based on a detailed description of the above cases, this article explores theproduce basic and value significance of each system prescribed by law from the focusof controversy case in order to make relevant analytical methods andrecommendations of solutions. In addition to the introduction and postscript, paper isdivided into three parts:The first part: issues are raised. Starting from the basic facts, three commoncontentious issues in lawsuits on shareholders’ right to access books are drawn. Itintroduces handling evidence and views on controversial issues made by courts,elaborates all points of view and reasons about controversial point.The second part: analysis of focus. This section is the main part of the article andit’s specifically divided four small parts. They are shareholders’ right to access booksand its relations with shareholders’ right to know, whether the purpose ofshareholders’ accessing books is justified, scope of shareholders’ right to access booksshould be expanded, commercial agent used in the shareholders’ right to access books.The first small part pays attention to exploring the connotation, the resulting systemand its meaning. Based on that, the other parts study the method of resolvingcontentious issues. It proposes legitimate purpose of abstract analysis and specificexamples of improper purpose to determine whether the legitimate aim or not. Itdemonstrates shareholders are entitled to access accounting documents which makingaccounting books is based. And it analyses the delegate issue in the right to access book from the perspective of conflict that commercial agent brings to characteristicsof a limited liability company and protection of trade secrets. Thus it makes a detailedanalysis of the case for this article.The third part: judicial suggestions on improving the system of shareholders’ of alimited liability company right to access books. Aiming at the focus involved in thelawsuits on shareholders’ right to access books, this article makes the followingrecommendations to resolve: identify the purpose of shareholders while consulting theaccounting books following and applying the principles of good faith, demonstrate therationality that shareholders search accounting documents, conditional applycommission system.