The Company Law Path Of Regulating Related Party Transactions

Company law of China does not clearly put forward the concept of related party transactions,nor does it have a basically systematic related party transactions regulation system.However,the frequent related party transactions in practice often damage the interests of the company,shareholders and creditors,and destroy the balance between commercial efficiency and fairness.Tracing back to the source,we must bring the related party transactions which are designed for efficiency back to the right track.Therefore,this paper intends to explore the feasible ways to regulate related party transactions in company law and improve the related party transactions regulation system in company law of China.In the first part of this paper,related party transactions in the context of corporate law is defined.First of all,the identification of related party transactions cannot be separated from the discussion of related relationship,the core of which is the control relationship,and other non-control related relationships derived from the control relationship cannot be overlooked.Next,related party transactions can be positioned as the transfer of resources and obligations between related parties without considering whether to pay the price.After that,the key objects are found by classifying related transaction types.Finally,it analyzes the particularity of related party transactions,which are different from general transactions,in order to seek regulatory strategy.The second part puts forward the regulation strategy of related party transactions.Following the occurrence of related party transactions,the regulation strategy is conceived according to the logic of prevention in advance,review in process and remedy afterwards: Procedural prevention regulation strategy aims at safeguarding procedural justice,the merit review regulation strategy insists on the fair and substantial transaction content,the remedy strategy focuses on the revocation of the resolution,the realization of damages and the exit of the shareholders of the closed company.The third part analyzes the inadequacy of the related party transactions regulation in the company law of China.First of all,related party transactions lack of basic norms.According to the statistics of related transactions in recent 10 years,it is found that most related transactions are related to limited liability companies.However,the company law which is in a basic legal position and can regulate all kinds of companies,has very few provisions about related party transactions,the definition of an association relationship does not reflect its nature,related party transactions are not covered in the provisions.Secondly,the procedure guarantee system of related party transactions is insufficient.In terms of information disclosure,the right of inquiry is superficial,executive compensation disclosure fails to be effectively practiced,there is no systematic information disclosure system of non-listed companies.About approval and excluded voting rights of related party transactions,the specific application of the exclusion of shareholder and director's voting right still needs to be improved,the authority of the articles of association on this issue is not stipulated.In the supervision system,lack of provision for cumulative voting for limited companies,the independent director supervision system has not been formed.In the prohibition of related party transactions,the prohibition type does not cover the more serious behavior of paying off debts for related parties.Furthermore,the fairness judgment standard of related party transactions is not stipulated in the company law of China.Finally,the remedy system also needs to be improved.About the responsibility of the person concerned,the lack of integrity obligations of controlling shareholders and actual controllers,the scope of exemption for senior management is narrow,the relationship between the right of relegation and the right of claim for damages is not clear.On the protection of creditors,there is progress for improvement in the provisions and application of the personality denial system,the sequence of creditor's rights of controlling shareholders and actual controllers is not shown in the provisions.Finally,the fourth part of the "company law" in China to regulate related party transactions restructuring path.Firstly,remade the judgment criteria of related party relationship,close to the nature of the relationship to control and be able to exert significant influence and without considering the price about related party transactions to define.Secondly,improve the procedural justice guarantee system of related party transactions,establish related party transactions disclosure rules for unlisted companies,related party transactions should be included in the scope of inquiry,give independent directors the authority to review executive compensation and related matters,improve the voting system,prohibit to pay off debts for shareholders or actual controllers.Thirdly,construct the fairness judgment standard of related party transactions,entire fairness rule and business judgment rule work together,and the rule of interests or not is introduced.Finally,improve the unfair related party transactions remedy system,the fiduciary duty of controlling shareholders and actual controllers is expressly stipulated and included in the object of action of shareholders,the directors have fulfilled the relevant procedures as the new exemption grounds for directors,it shall make up the difference if the amount confiscated is insufficient,enumerate the application of piercing the corporate veil system and establish initial proof rules for creditors,the rules of controlling shareholder and actual controller's creditor's rights are introduced,remove the obstacles to the realization of appraisal right of dissenting shareholders.