The Tort Compensation Liability Of The Actual Controller

The actual controller of the company often controls the operation and development of the company, which plays an important role in market economy. In judicial practice, actual controller often hides its actual controlling position by indirect shareholding, investment agreement and so on, which makes it difficult to recognize the company's actual controller. And the definition of company's actual controller in Chinese laws is vague. Besides, there are many cases that the actual controller of the company violates the fiduciary duty and damage the company's benefits. Therefore, it is quite necessary to clarify the tort compensation liability.Apart from introduction and conclusion, this paper consists of three parts:Part 1 is identifying the identity of actual controller. At present, Corporate Law vaguely defines the actual controller, but actual controller should refer to those who can actually control the company behaviors.The actual controllers of the company should have substantive standard and dominate possibility standard. The method of identifying the actual controller of the company in judicial practice is equity tracing method and censor voting method. In this case, Qiu Zhongbao realizes the controlling for ZHEJIANG HAINA and is the actual controller of the company.Part 2 is the fiduciary duty of the actual controller, which consists of attention, loyalty and information revealing obligation. The attention obligation of the actual controller refers to that the actual controller should carefully manage the business of the company with rational standard. The fiduciary duty of the actual controller is that the actual controller should consider the interests of the company and shareholders during execution its controlling rights. The information revealing obligation should include the principle of information revealing and the the information revealing. The information revealing should involve the existence,changes of actual controller and the relevance transaction. In this case, Qiu Zhongbao, the actual controller damages the interests of the company, shareholders and creditors, thus he violates the fiduciary duty.Part 3 is the identifying the tort compensation liability of the actual controller. In the Corporate Law, it defines the tort compensation liability for the company of the actual controllers, but it does not define the tort compensation liability for the company for the shareholders and creditors. In order to sustain the benefits of the shareholders and the creditors, It can refer to the Disregard of Corporation Personality of the company and company representatives can litigate and investigate the tort liability of the actual controllers on shareholders and creditors. In this case, Qiu Zhongbao applies the controlling position to occupy the capital illegally, violates the irrelevance guarantee so that it cause severe debt crisis of ZHEJIANG HAINA. The behaviors of Qiu Zhongbao conforms to the components of tort compensation liability, thus it should undertake the tort compensation responsibility.The conclusion is that Qiu Zhongbao takes the real controller position by indirect shareholding. However, Qiu Zhongbao violates fiduciary duty and diverts the large sum capital of listing company by relevance relations and provides joint liability for assured guarantee for other relevant company's lending and debts illegally under the name of ZHEJIANG HAINA, which destroys the benefits of ZHEJIANG HAINA, so it should undertake tort compensation liability.