Reserach On The Fiduciary Liabilities Between Shareholders

The mismatch of ownership and management authority is a symbolic feature of modern company. We always assume that it is the CEO and other senior manager controlling the entire company rather than the shareholders. Since the shareholders are considered to play a weak and passive role consistently. In practice, however, the controlling shareholders in Chinese market always play a strong and active role both in the public and private company. Therefore, the cases about controlling shareholders violate small shareholders are quite common and with a increasing trend. On the other hand, act 20 of current Chinese Company Law is too abstract to apply into the real cases. Obviously, the relevant law and regulation on the mentioned cases are not meeting the need. This article aims at set up the fiduciary liability between shareholders, offer the standard of violation of fiduciary liability and make suggestion on the compensation of relevant cases.In part Ⅰ, the discussion of two cases in which the abuses of controlling shareholders happened, and ask the question need consideration:How could we effectively regulate the controlling shareholder merely based on act 20 of Chinese Company Law. On the behalf of effectively application, we need to learn the fiduciary liability between shareholders from western country.In part Ⅱ, we try to clarify the concept of controlling shareholders, since it is quite different between traditional Chinese company law and western commercial law. Additionally, offer cases while shareholder with small percentage share become a shareholder with great power and is considered as controlling shareholder.In part Ⅲ, the content of fiduciary liability and the reasons why we need to regulate controlling shareholder. It will be discussed from the economical point of view, the unique company contract, and most importantly, the particular distribution of shares in Chinese public company, especially listed company.In part IV, the standard of breaching the fiduciary liability between shareholders as well as the common phenomenons in real legal practice. For instance, the illegal self-trade, the improperly amendment of constitution of company, refuse to the money distribution between shareholders.In part V, we try to set up a systematic rules and regulation to make sure the shareholders with less power are possible to attain their rights. This is very important especially in Chinese legal market.