The Guarantee For Shareholder's Inspection Right

Recent years,the market economy has been thriving in an ascendant trend.In order to take a share of the benefits of the reform and adapt to the modern operation mode,most enterprises use the modern company management system in which the ownership and management rights are separate.On this basis,the company's production,operation,and management rights are firmly held in the hands of managers and the board of directors,while shareholders do not directly participate in the company's daily operation and management.They can only be informed information through indirect channels.In consequence,the problem of information asymmetry arises.Because of the background above,to protect the rights and interests of shareholders who stand in the inferior position in getting information,especially minority shareholders,it is in urgent need to empower the shareholders the right to know by Company Law,to provide the legal basis for them to supervise the company's daily operation.As an essential part of the right to know,shareholder's inspection right is the premise and basis for the realization of other rights of shareholders.Therefore,the protection of shareholder's inspection right ought to be put on the agenda of the legislation of Company Law.Throughout Company Law worldwide,in order to balance the conflict of interests between the shareholders and the companies,most countries tend to set a series of restrictive conditions for shareholders to exercise the inspection right in their legislation system of Company Law.For instance,to ensure the shareholder is a rightful subject;the pre-procedure before the litigation of inspection right should be performed;the exercise of the inspection right shall have a proper purpose.However,the connotation of legitimate purpose is ambiguous.The reasons include the obscurity of the word itself,as well as the judgment of proper purpose shall be influenced by a degree of personal value,thereby inevitably tend to become subjective.Therefore,in judicial practice,courts in different regions do not converge in the determination criteria,which also leads to the definition and judgment of shareholder's proper purpose has always been a hot and challenging issue in the academic field as well as judicial practice.Some American scholars even believe that proper purpose is a term that causes a large number of litigationsIn view of above reasons,in order to ensure the correct application of Company Law of the People's Republic of China,and to correctly hear the cases including the effectiveness of the resolution,shareholder's right to know,the right to profit distribution,preemptive right,and the shareholder's representative action,in the1702 nd session of Judicial Committee of the Supreme People's Court,Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the“Company Law of the People's Republic of China”(IV)was adopted in principle on 5December 2017,and came into effect on 1 September 2017.However,even if the unjust purpose was objectified,it might lead to hypercorrection.Therefore,this dissertation hopes to provide some detailed suggestions and serve as a reference in the regulation of the exercise of shareholder's inspection right.In the current Company Law legislation of China,the subject,scope and subjective purpose of shareholder's inspection right are clearly defined.However,in an overall view,the provisions are too general but not detailed enough,especially in the specific procedures of the inspection.It remains excessive flexibility for manipulation,which makes the improper deprivation of shareholders' inspection right is of common occurrence.Therefore,a better protection of shareholders' inspection right through legislation and practice has gradually become the focus of both the theoretical and practical field.In terms of the scope of shareholder's inspection right,the existing laws have not yet specified the scope of the content and time of the inspection.Besides,there are still many disputes in judicial practice,including whether the shareholder has the right to inspect the original accounting documents and the accounting book before becoming a shareholder,or whether the shareholder who has transferred shares is still entitled to the right to inspect the accounting book before the share transfer.In terms of the procedure of inspection,the time and place to exercise the rightare negotiable between the company and the shareholder.In order to balance the interests of both parties,the time of inspection should be within the business hours in principle,and the place of inspection should be close to the place where the data are kept.In order to improve the validity of shareholder's inspection,the permission on entrusted inspection should not be controlled over-strictly.China's judicial interpretation adopts a compromising stand.On the one hand,it affirms that the identity of the shareholder is the prerequisite for the exercise of the inspection right.On the other hand,it entitles the shareholder the right to engage professional personnel to accompany the inspection.The provision of the unjust purpose of shareholder's inspection is one of the highlights of the Judicial Interpretation of Company Law of the People's Republic of China(IV).The regulation towards the subjective purpose of shareholder's inspection from the perspective of unjust purpose reflects the legislative tendency of protecting shareholder's interests in the establishment of inspection right in China's Company Law.The enumerative regulation and miscellaneous provision not only provide a relatively uniform standard of identification for judicial practice,but also leaves space for free adjudication.The understanding of the scope covered by the miscellaneous provision is the key to the application of the clause in judicial practice.In the last part of the dissertation,I propose several legislative opinions on perfecting shareholder's inspection right in macro-level through the analysis of the previous chapters and combining with the relevant provisions of foreign law.I offer my suggestion from the standpoint of the in-house lawyer and the shareholder's agent,that how these two parties combine the guarantee of shareholder's inspection right and the avoidance of risk in the protection of shareholder's inspection right or facing a lawsuit related to inspection right.The suggestions are expected to be helpful to future judicial practice.