The Study On Shareholder's Inspection Rights Under Competition Relationship

As a basic right,inspection right do play an important role in protecting s hareholders' benefits.However,every right shall be limited.When shareholders of limited liability company exercise their right to inspect books of the comp any,they shall be bound to “proper purpose” limitation.The present Compa ny Law of PRC only makes a general provision on proper purpose,which lea ds to different interpretation and standard in judicial practice.For the purpose of unifying the meaning and identification of proper purpose,here comes the F orth Interpretation of Company Law.Article 8 of the Forth Interpretation of Company Law lists three specific s ituations of proper purpose,and sets a bottom-up rule,which is of momentous significance.The legislators specify the judgement standard of proper purpose for the first time,which provides a guide for judicial practitioner.At the same time,the article also gives rise to certain disputes.When shareholders operate an business for their own or for others,which is in competition with company's major business,their request to inspect the b ooks will be turned down because the court will believe that their inspection a re under improper purpose.The main disputes of the article can be bolted down to two problems.First,the article seems to set an extra duty for shareholders.Under the pr esent company law,shareholders do not have non-competition duty.And during the business activities,investing in several companies which may be in competitive relationship is a common win-win business decision.However,the article will cause shareholder's inspection rights be deprived of because of their com petition behavior,which seems to go against the business spirits.Second,it is unreasonable to deprive all shareholders,in competition relati onship,of their inspection right.The competition relationship between sharehold ers and company only means a possibility of shareholders' wrong using compa ny message,which may cause company's loss.But possibility is possibility.De priving shareholders of inspection rights only because of such guess seems to be rash.For the purpose of smoothing the judicial practice of the new article,a de eper research is required to analyze the problems and disputes of the new artic le,seeking for an improvement of the legislation.This paper will focus on the first item of the 8th article of the Forth inte rpretation of Company law,making a systematic research on shareholder's insp ection rights system.The guiding paragraph describes the topic of the research,the definition o f related concept,the research state of existing papers and the research method s of this paper.This paper will focus on the first item of Article 8,limiting t he area of study to the limited liability company.The first chapter will introduce related inspection right theories and legisla tion situation,locating the problem under the whole system,making it clear th at as an intrinsic right,inspection right's legal nature is in conflict with the ne w article indeed.The inspection rights derives itself from representation theory and benefits owners theory.Under the representation theory,directors and managers represen t the shareholders to manage the company,so they shall be under shareholders' inspection.Under benefits owner theory,shareholders are the final risk-takers,so shareholders shall have the right to inspect the books of company.No matt er under which theory,the right of inspection is too important to be deprived of.The second chapter makes a practical analysis on real cases,which take p lace after the implementation of new article.Through the analysis of reason,re sults,and subjects,learn the judicial practice situation and problems of the ne w article.First,the words of the article seem unclear so that leads to differentjudgements of different courts.Second,in the practice,most courts take use o f the identity information of the shareholders in the competitive company to ju dge whether shareholders take part in competitive business activities.The third chapter focuses on theory study.Discuss on the definition proble m regarding to the new article,and dig deeper logic problems of the new arti cle.First,the problem of different judgement caused by unclear words can be solved by legal interpretation.Second,the other problems,such as logical prob lem,cannot be solved by simply legal interpretation.New legal system shall b e built.And the forth chapter gives improving advice to the inspection right legal system.On one hand,build an information revealing system.When shareholde rs take part in competitive business activities,they shall reveal related informat ion to the company.On the other hand,take the punishment afterwards.Only if the shareholders take wrong use of the company massage and infringe the f actual benefits of the company,the shareholders shall be punished,and their ri ght of inspection shall be deprived of.Through combing theory and practice,this paper analyze the main proble ms of the first item of Article 8 of the Forth interpretation of Company Law,and provide several improvement advice,promoting the benefit balance between shareholders and company.