Research On The Fiduciary Duty Of Controlling Shareholder In Actual Transaction Of The Public Company

The fiduciary duty of the controlling shareholders is a wide topic. This article will focus on the fiduciary duty in the actual transaction of the public company. In actual transaction of company, the shareholders can rely on strong voting power and controlling force, via M&A, Takeover, Reorganization and Consolidation to finish self-interested deal. This behavior may damage interest of public company and minority shareholders. When the company in the face of acquisition, various interests will slowly highlight, so it needs the fiduciary duty of controlling shareholders.This essay elucidates rationality of the fiduciary duty, illuminates the legal basis of the fiduciary duty. It includes theory of agency by agreement, trust relationship, fairness and justice, capital majority decision, public liability. The evaluation criterion of the controlling shareholders’ fiduciary duty contains Pareto Standard, Shareholder Wealth Maximization Standard and Business Judgment Rule. Traditional theory considers controlling shareholders’ fiduciary duty refers to attention duty and honest duty. Because controlling shareholders utilize the control power to injure company and small shareholders, duty of disclosure should be necessary. Duty of disclosure can guard against abuse of control. The fiduciary duty of the controlling shareholders is general and principled. This article takes example by US common law, introduce controlling shareholders’ fiduciary duty in three concrete situations. It includes respectively forbid pushing out medium shareholders by cash-out merger, forbid acquiring unjustifiable control premium, forbid conducting transaction of interest conflict. The company law in our country is short of application. Though securities law stipulates the fiduciary duty of controlling shareholders, concrete situation in actual transaction is deficient in law. Because there are many defects of law, the author comes up with some perfection of measures. The measures include confirming controlling shareholders’ fiduciary duty and the scope of application. The company law should make clear breach of fiduciary responsibility. To increase profit allocation compensation of the small shareholders. Perfecting the litigation system of shareholders is very essential. To strengthen the supervision of the controlling shareholders’ duty of disclosure. Finally, we should have correct understanding of the fiduciary duty of the controlling shareholders, it must estimate on the basis of specific circumstance. The fiduciary duty of the controlling shareholders must limit in concrete scope. Proceeding from its national conditions, the control shareholders’ power will be counterbalanced.