Research On The Protection Of The Rights And Interests Of Middle And Small Shareholders Of Cross-shareholdings By Parent And Subsidiary

With the rapid development of China's economy and the continuous expansion of the size of enterprises,competition between companies is becoming more and more fierce.In order to enhance their competitiveness,many companies often increase their scale through reinvestment.Cross-shareholding by parent and subsidiary companies is one of the most commonly used methods.Although cross-shareholding can help companies resist malicious acquisitions and strengthen joint cooperation between companies,the violation of the rights and interests of small and medium shareholders has become increasingly prominent,especially parent-subsidiary companies'cross-shareholding.The cross-shareholding of parent and subsidiary companies originated in the United Kingdom first,and has matured in Japan.Many foreign countries have already studied this issue very maturely,and they have quite perfect regulations at the legislative level.Due to the late reform and opening up in China,the new company development method of cross-shareholdings between parent and subsidiary companies appeared in our country relatively late.Although there have been many studies on this issue in the theoretical world,there are legislative issues in this regard.Fewer regulations make it impossible to rely on this issue in judicial practice.In particular,China's economy is currently undergoing rapid economic transformation.In order to adapt to social development,many group companies are eager to achieve success and often seek their own development through the establishment of new subsidiaries by the parent company.This is usually accompanied by the expense of minority shareholders.Therefore,it is urgent to strengthen the research on cross-shareholding of parent and subsidiary companies,speed up the legislative work,and protect the rights and interests of small and medium shareholders.Due to the differences in the legal system,historical traditions,and national policies,countries around the world have different regulations on cross-shareholdings,and some regulations even contradict each other.Among them,the most controversial are the definitions of the parent-subsidiary relationship,and some conflicts in various countries in restricting the voting rights of subsidiaries in order to protect the interests of small and medium shareholders.The United States has a relatively relaxed attitude towards cross-shareholding by parent and subsidiary companies due to its relatively complete supporting laws in commercial law and joint-stock company law.Even if cross-shareholding is allowed,in order to minimize the disadvantages caused by cross-shareholding,the United States has established three specific measures,such as a multiple representative litigation system,a shareholder equity objection withdrawal mechanism,and a subsidiary's voting right restrictions.Protect the rights and interests of small and medium shareholders.However,in the subsidiary voting right restriction system,since the legislation does not specifically specify whether the subsidiary's voting rights need to be restricted when the parent company's shareholding in the subsidiary's equity does not reach 50%,it is controversial in judicial practice.The definition of parent-subsidiary relationship in Japan is mainly based on formal control and supplemented by substantive control.It also has certain shortcomings,but its legislation is very specific in the exceptions that allow subsidiaries to acquire equity in the parent company.It has not violated the basic principle of "prohibiting companies from acquiring their own shares",and has maintained the free market behavior between companies to the greatest extent.Germany does not have the concept of parent company and subsidiary company in law.It uses the concept of dominating companies and subsidiary companies,and its connotation is "unified management".This concept can well explain the relationship between the dominating company and its affiliated companies,and German law has a series of strict legal consequences for this regulation,which has a sufficient deterrent effect on the management of the dominating company and can minimize the controlling shareholder of the dominating company.Infringement on small and medium shareholders due to cross-shareholding.Based on the specific analysis of the current situation of infringement of small and medium shareholders by it,the author analyzes foreign legislation in detail on the basis of China's specific economic development level,draws on its beneficial experience,and puts forward the following suggestions:First,the relationship between parent and subsidiary companies is clearly defined in legislation.The rules on dominating subsidiary companies in German law avoid the lack of formal control,and the inversion of the burden of proof is more conducive to the facts of the case,and it is convenient for the judge to make a correct decision,Secondly,the specific attitude to cross-shareholding of parent and subsidiary companies should be clearly defined in the legislation,that is,it is prohibited in principle and allowed in exceptional cases.This can fully utilize the economic advantages brought by cross-shareholding and stimulate the enthusiasm of market players;The infringement caused by cross-shareholding by the parent and subsidiary companies to the relevant stakeholders is minimized.Finally,considering the deficiencies in China's cross-shareholdings of parent and subsidiary companies at the legislative level,it is recommended to improve the content of the Company Law in three areas,including information disclosure,voting rights of minority shareholders,and shareholder representative lawsuits,to effectively safeguard the rights and interests of minority shareholders,and to build specific improvements Legal system.