An Empirical Study Of Derivative Action System

The milestone of shareholder representative litigation system development in China was the publishing of the 152 th article of the revised "Company Law" in 2005.This initiative is an effective complement to the “Company Law”.Shareholder representative litigation system suits for the current requirements of the fast growing market economy development in our country and provides more explicit acts for the applicable cases.Based on the judicial practice,however,the shareholder representative litigation has not been sufficiently applied.In order to make full use of this act in practice and protect the interests of revolved company and shareholders,we have collected the relevant cases up to now and analyzed the defects from different perspectives and tried to offer some constructive suggestions and solutions.This paper has collected 60 trial cases since 2005 as sample of shareholder representative litigation cases.We have summarized and evaluated from the the overall situation of cases,the types and equity of the involved companies,the subject of litigation,causes of actions,the demanded procedure of shareholder representative litigation system in the revised "Company Law" under the framework of empirical study and offered related suggestions for improvement.As proved in the study,the shareholder representative litigation has gradually been applied in our country and has protected the rights and interests of shareholders and companies to a certain level.China and foreign countries vary a lot in the types of involved companies.In China,limited liability companies are rarely involved in shareholder representative litigation cases,meanwhile,the joint stock limited companies are the main involved type.The cause of current situation is not that joint stock limited companies do not need the help of this action but that the shareholder representative litigation has not been appropriately applied.According to our study,the barrier for the efficient application is the extremely strict limitation of lawsuit qualification of accuser in joint stock limited companies.About the argument of general and narrow sense of definition for the accused,we have drawn to a conclusion that the role of the accuser company is more appropriate as the third party.In addition,we have also probed into the practice of demanded procedure especially about immunity and reconciliation.We believe that mandatory judicial review should be included in the reconciliation procedure and dual shareholder representative litigation is requested in parent and subsidiary company cases in order to encourage appropriate litigation,to avoid malicious litigation and to protect legitimate interest of companies.