Case Study Of Settlement In Shareholder Representative Action

The system of shareholder representative action was formally introduced by China’s“Company Law” in2005, while the relevant provisions only specify the situation that theshareholder representative action was filed and the plaintiff and the defendant in the action inthe general, which fail to carry out specific provisions on many problems that may beinvolved in the proceedings of shareholder representative action, and the settlement of thisaction is one of the problems. The Supreme Court has issued three judicial interpretationssuccessively which also only involve limited contents, such as the plaintiff qualifications.Besides, as China is not a nation that follows case law, the beneficial attempts in judicial casescan not produce legal effects. In view of the imperfections in our country’s system ofshareholder representative action, it is urgent to research it from the perspective of legislationand judicature.Based on the China International Futures Company’s shareholder representative actionand with reference to the institutional norms and trial practice of the shareholderrepresentative action in the United States, Japan and other countries, this paper tries to studythe settlement issues in shareholder representative actions. This paper is divided into fourparts:The first part describes the basic facts of the selected case, including the cause of theaction, the plaintiff shareholder’s claims, the court’s decisions, the settlement in theproceeding and so on.The second part presents the focus of controversy in the case, including whether theshareholder representative action can be settled, whether the company has the right to settleand how to ensure the legitimacy of the settlement, which will be analyzed respectively later.The third part analyzes the related issues involved in the settlement of shareholderrepresentative action. First, it analyzes the theoretical perspectives on the settlement ofshareholder representative action at home and abroad and the positive benefits. Secondly, itdiscusses the shareholder plaintiff, the defendant and the company’s rights in the settlement ofshareholder representative action respectively. Finally, it analyzes the legitimacy regulation ofthe settlement in the shareholder representative action. The last part puts forward some recommendations to the relevant legislation on thesystem of settlement in shareholder representative action on the basis of the companylegislation and judicial practice in the United States, Japan and other countries,, such asclearing the subjects of the settlement right, setting notification procedure and reviewprocedure in the settlement process, giving the company and other shareholders the right todissent, empowering the settlement to terminate the proceedings and so on.