The Research Of The System Of Double Derivative Suit

The current Company Law of China stipulates that the shareholders may bring shareholder derivative suit for the company's benefits,which provides a strong guarantee for protecting the interests of minority shareholders.However,in recent years,the rapid development of the operating model of the parent-subsidiary company in China had brought challenges to the traditional company law based on single company,the system of the shareholder derivative suit has encountered obstacles in the application of laws.When the misconduct of the director of the subsidiary company damages the interests of the subsidiary company,both the interests of the parent company and its shareholders will also be indirectly harmed.At this time,the system of the shareholder derivative suit cannot provide an effective institutional guarantee for protecting the interests of the parent company's shareholders.In order to protect the interests of the parent company's shareholders under the structure of the parent-subsidiary company,the United States first confirmed the system of double derivative suit through judicial precedents,Japan also introduced the system of double derivative suit during the revision of the Company Law in 2014,which provided an effective solution to this problem.However,there is no legislation on the system of double derivative suit in China,the interests of the shareholders of the parent company need to be protected.This article is divided into four chapters,based on the detailed explanation of the theory of the system of double derivative suit,study the relevant systems of the United States and Japan,and specially design the system of double derivative suit in conjunction with our country's legislation and practice.The first chapter first introduces the theoretical foundation of the system of double derivative suit,which analyzing the main characteristics and essence of the system,and analyzes the legitimacy based on the analysis of the supporting doctrineand opposition doctrine of establishing the system.The right to file double derivative suit is a co-benefit right,the purpose of the lawsuit is to protect the interests of the parent company and the subsidiary company,and the result of the suit is not only to the subsidiary company,but also benefits the parent company and its shareholders.The right to file double derivative suit is also representative and subrogation.The parent company's shareholder as the plaintiff plays the role of representative of the litigation and also as the subrogation of the parent company to exercise suit.In essence,the double derivative suit is an exception to the proper plaintiff principle,and it is also the crossover between the parent and subsidiary companies.In order to demonstrate the legitimacy of the system,this article first introduces various theories supporting the system and then refutes the reasons of opposing the system,thus strengthening the argument.The second chapter introduces in detail the establishment and development of the system of double derivative suit in the United States and Japan and analyzes it specifically,providing reference experience for China to establish this system.From the beginning of the 20 th century,the United States began to establish the system of double derivative suit through judicial precedents,established its various theoretical foundations,and continuously improved the prosecution requirements and procedural elements.There existed two issues should be concerned,which are the stockholding period of the qualified plaintiff and pre-procedure.Japan introduced the system of double derivative suit in 2004 when amending the Company Law,based on the need to protect interests of the parent company in judicial practice and reasons for lifting the ban of institutional shareholder,which is selectively adopted and applied the system of the United States in accordance with the national conditions.There also existed two issues should be concerned,which are the stockholding period and ratio conditions of the qualified plaintiff and the scope of parent-subsidiary companies,which should be clear in our legislation.The third chapter introduces the practice and legislative status of the system of double derivative suit in China,and analyzes the necessity of establishing this system.There have been many cases of double derivative suit in practice.At the beginning the court refuted them for the reason for the plaintiff's disqualification,but later adopted an alternative way to enable the shareholders of the parent company to file shareholder derivative suit.However,there is still no official legislation,and cannot also be expansive interpreted from Article 151,which cannot provide a legal basis forthe double derivative suit.At the same time,China's existing laws lack effective legal remedies for protecting the interests of the shareholders of the parent company,especially minority shareholders.Therefore,the interests of the shareholders of the parent company are not well protected.This chapter also introduces that China's establishment of the system of double derivative suit is necessary for the following reasons: first,there are applicable obstacles under the structure of the parent-subsidiary company;second,the system of double derivative suit has positive significance.The fourth chapter based on our country's legislative provisions of the system of the shareholder derivative suit and related regulations of the United States and Japan,specifically designing the system of double derivative suit of China from the three aspects of applicable preconditions,subject qualifications and pre-procedures.With respect to the application preconditions,it is first necessary to set up a “negative list”of the application of the system,excluding the double derivative suit for the purpose of seeking improper interests for the plaintiff or third party,or damaging the interests of the parent and subsidiary company.Then it defines the scope of the parent-subsidiary company.We should grant the right to bring double derivative suit to the shareholders of the parent company fully controlling the subsidiary.The subject qualifications of the system of double derivative suit mainly include the two issues of the qualified plaintiff and the qualified defendant.The qualified plaintiff shall be the shareholder of the parent company who has certain stockholding requirements,which should be specified in terms of the period and ratio conditions.And exceptions can be set according to the particularity of the structure of the parent-subsidiary company.It should also be noted that in the special circumstances such as share transfer of share exchange,the period and ratio conditions of the qualified plaintiff should be modified.The qualified defendant should be limited to directors,senior managers,supervisors of important subsidiaries,or others who actually control the subsidiary.If the plaintiffs want to file double derivative suit against ordinary third parties who do not actually control the subsidiary,the conditions must be met of directors,senior managers or supervisors and ordinary third parties misconduct at the same time.With respect to the re-procedure,it should be set up that after the infringement occurs,the shareholders of the parent company may make request of filing a lawsuit to the subsidiary company,and at the same time notify the parent company with the relevant documents in writing.The subsidiary company refuses to file a lawsuit within 30 daysfrom the date of receipt of the request,the parent company's shareholders can bring a double derivative suit in their own name.