The Judicial Remedies To The Shareholder's Right To Surplus Distribution In China

Shareholders obtain investment income by surplus distribution of the company.The main purpose of the shareholders investing company cannot be achieved when someone infringe upon the shareholder's right to surplus distribution,with the reasonable expectation of the shareholders defeated.The disputes about surplus distribution in a limited liability company is particularly common in practice.On the one hand,majority shareholders usually object to surplus distribution because of disguised allocation,on the other hand,minority shareholders lack of voice in the resolution of the surplus distribution of the company in accordance with the capital majority decision rule.Thus,shareholder's right to surplus distribution will be infringed when majority shareholder abuses the rights of shareholders or directors and senior managers of the company fraud minority shareholders.There are two main types of infringement of the shareholder's right to surplus distribution.One refers to the infringement of the specific shareholder's right to surplus distribution,which shareholders have made an effective resolution of the surplus distribution,but the company refused to implement.Another one refers to the infringement of the abstract shareholder's right to surplus distribution,including the company refused to have a shareholders' meeting or objected to have a resolution of the surplus distribution,and the board of shareholders does not distribute surplus or only distributes a very small part of the company surplus.China's judicial practice follows the principle of corporate autonomy for a very long-term and insist that courts should not interfere internal affairs of companies especially the company's surplus distribution.In practice,most courts believe that shareholders must provide a legal and effective resolution of the surplus distribution by the shareholders' meeting when filing a lawsuit,otherwise the shareholder has no right to raise the surplus allocation litigation.In other words,shareholders cannot find a way to assistant from the law even the abstract right to dividends have been infringed.In fact,the infringement of the abstract right to dividends is more common in the limited liability company,however,shareholders always cannot find an effective way of judicial relief since judicial practice does not allow shareholders to file a mandatory distribution of surplus.The Company Law provides several kinds of judicial remedies such as the appraisal right of dissenters,invalid and revocable resolution of the shareholders' meeting and shareholders request dismisses the company.However,above systems cannot solve the disputes of abstract surplus distribution.In this case,the key to perfect the judicial relief of the shareholder's right to surplus distribution in our country is that shareholder's abstract right to surplus distribution should be accepted into the judicial protection scope.Building compulsory litigation of surplus distribution in our country,in certain situations,courts can intervene companies' surplus distribution and has the right to verdict the company distributing to shareholders.Judicial intervention in the distribution of the company based on theories of both the economics of law and the company law.Shareholder oppression theory and legal relief in America and unfair prejudice in Britain as well as abroad judgment of mandatory distribution of surplus provide us with important reference value to establish the system of mandatory distribution of surplus in our country.In order to improve judicial remedies of shareholders' right to surplus distribution,not only should we establish mandatory surplus distribution litigation system,but also solve some specific problems such as determining the litigants,distributing burden of proof reasonably,as well as expanding the effectiveness of the litigation in practice.In a compulsory litigation of surplus distribution,different types of disputes over the surplus distribution should apply different legal rules and judge standard.