Study On The Lawsuit Of The Closed Company For Compulsory Dividend Distribution

Dividend distribution belongs to the company's autonomy,but the economic structure of the limited company determines the existence of large shareholders' repression.The long-term non dividend policy seriously infringes on the right of small and medium-sized shareholders to claim for the distribution of earnings.Article15 of the provisions of the Supreme People's Court on Several Issues concerning the application of the company law of the people's Republic of China(IV)(hereinafter referred to as the interpretation of the company law(IV))provides for the compulsory distribution of dividends,with the purpose of rectifying the failure of corporate autonomy.However,the judicial interpretation has no specific provisions on the abuse of shareholders' rights.Although some specific cases of abuse of rights have become a consensus,such as the company does not distribute profits,but the directors and senior managers receive excessive remuneration,or the controlling shareholders manipulate the company to purchase property or services unrelated to operation for their own use or consumption,or conceal or transfer profits,etc.However,the above situation is summarized in judicial practice,which can not be covered by enumeration,that is to say,there is no type of expression of abuse.In practice,more than 75% ofthe surplus disputes are rejected as "insufficient evidence".It is difficult for the plaintiff to obtain evidence,and the burden of proof is heavy.There are also disputes on how the court decides.Therefore,it is necessary to standardize and unify the judicial application of Article 15 of the interpretation of the company law(4),and refine the relevant provisions.In order to unify judicial application and refine relevant systems,the research methods of this paper are case study and literature study.Based on the analysis of more than 200 judgments published by the website of adjudication documents from September 1,2017 to January 23,2020,which are about the dispute of surplus distribution and the main text of the judgment appears "abuse of shareholders' rights" and "Article 15 of the provisions of the Supreme People's Court on several issues concerning the application of the company law of the people's Republic of China(IV)",this paper sums up the "abuse of shareholders" recognized in the current judicial practice It also analyzes how the court requests the proof and the judgment result,and uses the foreign practice for reference to find the collusion point.Finally,the author puts forward some suggestions on the definition of "abuse of power" and the unification of the court's judgment ideas in litigation.This paper consists of three parts: introduction,body and conclusion.The foreword includes six parts: the question,the research value and significance,the literature review,the main research methods,the paper structure,the main innovation and the insufficiency of the paper.The main purpose of this paper is to put forward the research problems,clarify the significance of the research,the specific planning of the paper structure arrangement from the perspective of historical development,and provide the literature review to support this paper.The first chapter is to raise questions.The first section introduces the reasons why the limited company does not distribute dividends for a long time,and makes a comparison with the joint stock company.Compared with the listed companies in the joint-stock companies,the limited companies lack of fair trading platform and exit mechanism,and the small shareholders cannot get reasonable profit return.Thelong-term non dividend policy also reduces the tax burden for the limited company to a certain extent,which also becomes a reasonable excuse for the major shareholders' crowding out strategy.The second section makes an overall comment on the current judicial remedies.Before the introduction of compulsory dividend distribution lawsuit,the academic circles mostly took the current passive withdrawal mechanism as the reason that it was not targeted and the benefit was low.The exit mechanism of "voting with feet" is hard to apply and easy to avoid.However,the provisions of compulsory dividend litigation are not detailed enough,and the actual effect is not ideal.The third section discusses how the court decides and how the parties provide evidence.Chapter two and chapter three analyze two main problems.The second chapter analyzes the first problem,that is,how to explain the abuse of shareholders' rights.The first section gives a comprehensive explanation of "abusing shareholder's rights" by means of text meaning and system explanation.According to the literal interpretation,"abuse" needs to judge the subjective purpose through objective behavior.The majority shareholders make use of the control position to abuse the voting right to decide not to distribute profits or to appoint the management under their control to carry out the abuse.According to Article 20 of the company law,there are three kinds of abuse: capital shortage,property confusion and related transaction.The second section summarizes and classifies the situation of "abusing shareholder's rights" in practice by sorting out the judgment.The abuse of behavior is mostly related to violating the obligation of good faith,misappropriating the company's property,on-the-job salary or excessive consumption.The third section summarizes the specific situation of similar concepts in foreign countries.For example,the unfair infringement system in Britain,the theory of shareholder repression in the United States,the "major causes" of shareholders in German cases,and the regulations on the damage of controlling shareholders in Macao provide references for determining the abuse of rights.The third chapter analyzes the problems in the procedure,that is,how to allocate the burden of proof.The first section analyzes the norms of the burden of proof.Thenew rules of civil evidence perfect the system of documentary evidence order.However,it is difficult for the plaintiff shareholders to provide evidence to prove that the abuse of rights by major shareholders has not been solved.The second section analyzes how to provide evidence and how to distribute the responsibility of the parties in practice through judicial judgment.For the form of evidence,the court adopts the standard of "substance is more important than form".In most cases,the plaintiff bears the main burden of proof.The third section summarizes the practice of the United States and the United States.The requirements of the burden of proof for the plaintiff in the United States and the United States are constantly developing in practice.It is worth learning to match the burden of proof with the capacity of proof.The fourth chapter analyzes how the court judges in the judicial application.The first section analyzes the boundary of judicial intervention in business judgment.The rule of business judgment is an exemption of directors' duty of care,but it is not applicable to limited companies.Therefore,the court should step in to examine whether the business purpose is reasonable.The second section introduces how the courts of other countries solve the dispute of profit distribution.The case law of British and American countries develops to judge the reasonableness of business purpose according to the reasonable expectation.Reasonable expectation is applicable to different situations.It is necessary to comprehensively consider the degree of credibility of both parties,whether there is abuse of power,the contribution of each operating shareholder,and the maximum benefits that can be foreseen when the shareholders invest such as the articles of association.It is generally believed that reasonable expectations must be known and based on the consensus reached by all shareholders at the time of the establishment of the company.Although the courts of other countries have ever directly adjudicated dividend in history,they have gradually replaced the way of adjudging direct dividend by improving other relief measures.The third section analyzes the practice of judicial cases in China.The practice of court in China is to adjudicate dividends directly.Despite the controversy,the reason is that the court lacks the ability to apply business judgment rules due to informationasymmetry,lack of experience and theoretical reserves and other reasons.However,the information and related professional knowledge can be mastered through the reports of professional institutions such as audit and accounting firms,and the court can make a decision with the help of the information fed back by intermediary institutions.Chapter five puts forward solutions to the problems.In the first section,a detailed method is proposed for the recognition of the first problem "abuse of power".Taking Article 20 of the company law as the basic clause,we should build a Chinese style "unfair infringement" system,including the compulsory dividend distribution lawsuit,to form a system,which can more comprehensively type "abuse of shareholders' rights".The second section puts forward suggestions on the burden of proof in the proceedings.In the litigation,the burden of proof should be properly inclined.Whether there is shareholder repression and unfair infringement is the starting point to judge whether there is abuse.The subjective intention of abuse needs to be expressed through objective behavior,and the burden of proof of objective facts lies in the plaintiff.The plaintiff's shareholders only need to prove the preliminary evidence of exhausting internal relief and being suppressed,and provide evidence to judge whether there is surplus,which is provided by the defendant.The third section puts forward a new way to solve the problem of how the court judges,aiming at unifying the standards of judgment and limiting the discretion.According to the ways of applying for entrusted audit and investment cost investigation,the court examines whether the commercial purpose is reasonable from the capital flow,so as to judge whether it belongs to "abusing shareholder's rights".The reasonable business purpose is in line with the reasonable expectation of the general shareholders,so as to unify the judgment thinking and standardize the discretion.The conclusion part is the summary of the whole paper,and based on the current situation and development trend of the research,it puts forward the direction of future research.The action of compulsory distribution of dividends is only a part of the protection of the interests of small and medium-sized shareholders in the companylaw.This not only involves the improvement of the corporate governance structure and the board of directors system,but also involves the determination of the boundary of judicial intervention.The common law system can better adapt to the efficiency and transaction security in economic operation by establishing rules through case law,so it is worth learning.