The Civil Liability Of Listed Company's Large Shareholders For Violating Promise

This paper studies civil liability of listed companies' large shareholders for breach of promise. The issue is mainly discussed in the following sections:The first part introduces the nature of civil liability of large shareholders for breach of promise. There are a variety of forms of promise. Firstly, the paper determines which promise is actionable. In general, if large shareholders doesn't release promise by the official way, the promise couldn't be adjusted by law. The court shall determine whether the actionable promises are default behaviors or infringements. If the promise is related with the contract, large shareholders shall bear the liability for breach of contract; if the behavior of breach of promise damage investors' property rights and interests, large shareholders shall bear tort liability. If large shareholders violate fraudulent promises, their behavior can be interpreted as misrepresentation. Of course, if large shareholder's responsibility for breach of contract and liability for tort are concurrent, investors may choose to initiate the infringement lawsuit or the contract lawsuit.The second part analyzes the damage. As for responsibility for breach of contract, the losses of investors can be calculated by their agreement. If they didn't make arrangements, the parties can negotiate and determine the amount of damages; If consultation fails, the court determines actual loss and expectation benefit of investors. When defining the loss, the court need to distinguish between compensation promise and execution promise, for the former, the violation may lead to the loss of investors' expectation benefit, the loss can be calculated by the amount of compensation and range; For the latter, the actual loss which investors in the stock market suffered includes the margin of securities price and transaction costs, the court could use the method of available estimation and comparison to determine a reasonable amount for the loss of expectation benefit. As for the infringement, investors' losses include inherent interest loss and loss of expectation benefit. Inherent interest losses include loss caused by volatility of stock price and transaction cost. The calculation of volatility of stock price based on the several provisions of 29, 30, 31, 32, 33 and 34 on the Supreme Court trial the civil compensation cases caused by misrepresentation in the security market to determine, which is called the margin method. Before the base date(including it), the formula is the difference between the buying price and selling price of securities, after the base date, the calculation formula is the difference between the buying price and the fair price. When the court determines the fair price by the base date, the calculation shall start from "the behavior of violation known to the public". The expectation benefit includes the future earnings, which is available and reasonable, such as the interest.The third part introduces the cognizance of the causality. If large shareholders violate the fraudulent promise, the causality between the violation and investors' damage is "the trust relationship", the court infers “the trust relationship” by considering the time series, large shareholders' trustworthiness, securities correlation, promise accuracy factors and so on, of course, large shareholders also can overthrow the existence of "trust" through the evidence. If large shareholders violate non-fraudulent promise, the court identifies the causality between the violation and investors' damage by "quite causality" and "rational man", meaning essence, closely standards, which is content with loss of causality. As for the causality of responsibility of breach of contract, the court determines it by predictability and "quite causality" standard, the court can judge it specifically by the industry situation on the time of signing the contract, the market situation and the similar deal of the company; In addition, the court should exclude other factors such as market risk and investors' own fault.The fourth part analyzes large shareholders' subjective condition. The imputation of liability for breach of contract use the principle of no-fault liability, the courts don't need to consider subjective state. While, tort liability must be thinking about large shareholders' subjective condition, large shareholders don't bear civil liability to the violation of promise without fault. When large shareholders makes a fraudulent promise, their subjective state is fraudulent. The court may determine by recognizing element and will element; the subjective statement of large shareholders violating the promise is negligence or non-fault, only the negligence is to blame, duty of care could be used to determine large shareholders' negligence. Both of liability for breach of contract and tort liability have excuse for non-responsibility, because of objective conditions, unpredictability reasons, shareholders shouldn't bear civil liability.