Identification Of Improper Purpose In The Exercise Of Shareholder Inspection Rights

Shareholders’ right to know is one of the basic rights enjoyed by shareholders,and it is also the premise for shareholders to exercise many other rights.Shareholders’ right to consult company books is an important part of the right to know.In the process of exercising this right,the game between company interests and shareholders’ interests is often involved.From the standpoint of regulating shareholders’ rights,the company law restricts it with "purpose legitimacy".Article 8 of the Provisions of the Supreme People’s Court on Several Questions Concerning the Application of the Company Law of the People’s Republic of China(IV)(hereinafter referred to as "Interpretation IV of the Company Law"),which came into force on September 1,2017,lists four situations in which the right of access is exercised for "unjust purposes",which are different from the complicated judicial practice.With the social practice,it is not enough to solve all kinds of disputes and disputes.There is still considerable room for discretion in the process of referencing and making judgments,so there are many views.The purpose of this paper is to further clarify the context,compress the discretion space and reduce the disputes and contradictions in practice on the basis of respecting the legislative intention and combining academic disputes and judicial precedents.This paper is divided into three parts.The first part is about the necessity of setting up the rule of unfair purpose in the shareholder’s access right system.Starting from the basic concept and nature of the shareholder’s access right to account books,it discusses the functions of the shareholder’s access right system,the harm caused by the abuse of the shareholder’s access right,and balancing the interests of shareholders and companies.Shareholders’ right to know includes "the right to consult accounting books","the right to consult financial and accounting reports" and "the right to apply for the appointment of inspectors",and the core of which is the right to consult accounting books of shareholders.The definition of shareholder’s right of access to accounting books is not clearly stipulated in company law,and there are different understandings in academic circles.This paper holds that shareholder’s right of access to accounting books,accounting documents and other relevant original documents and records refers to shareholders’ right of access to accounting books and accounting documents.As for the identification of the nature of shareholders’ right to know,this paper argues that there are three main aspects: firstly,the right of access is "common interest right";secondly,the right of access is "inherent right";thirdly,the right of access is "individual shareholder right".The second part is about the rules and shortcomings of the determination of improper purposes in the exercise of shareholders’ access rights in China.Article 8 of Interpretation IV of the Company Law corresponds to several situations in which shareholders exercise the right of access to accounting books for improper purposes,including the existence of "competitive relationship business","shareholders may damage the interests of the company","once exercised the right of access to damage the interests of the company" and the "back-to-back clause".Judging from the needs of judicial practice,the above provisions are still not detailed enough,leaving a huge space for the court’s discretion.For example,what is "competitive relationship business" ? What are the situations in which shareholders may harm the interests of the company? Is there any question about the provision that "once damaged the interests of the company through the right of access" ? What does the so-called "other circumstances" in the clause refer to? With these doubts,the author starts to discuss and interpret Article 8 of Interpretation 4 of Company Law in more detail,so as to make it more instructive and operational.At the same time,three typical judicial cases will be selected after the promulgation and implementation of Interpretation 4 of the Company Law.The perplexity of the unfair purpose determination rules in judicial practice will be analyzed from three aspects: emphasizing on "protecting shareholders’ right to know",emphasizing on "safeguarding company interests" and emphasizing on "balancing shareholders’ and company interests".The third part is the suggestions on how to improve the "unfair purpose" of determining shareholders’ access rights,mainly from the following aspects: paying attention to the principle of "balance of interests","distribution of burden of proof" and "introducing supplementary mechanism".This paper holds that how to balance the interests of the company and shareholders and resolve the contradictions between them is the original intention of the shareholders’ right of access to accounting books.There is no difference between the development of the company and the maintenance of the legitimate rights and interests of shareholders.We must always uphold this principle and concept to make all kinds of judgments.In view of this,in the typical determination of unfair purposes,this paper puts forward: 1.Several kinds of determination of "competition relationship";2.Detailed rules of "possible damage to the interests of the company";3.Textual research on the legislative meaning of Article 8,paragraph 3,of Interpretation 4 of Company Law;4.How to identify unfair purposes by using the clause of "pocket bottom".Through the pre-procedure to strengthen the investigation of "improper purposes",this paper argues that in the process of preliminary verification of the application,the company needs to examine whether the shareholders have the subject qualification,whether the scope of inspection is reasonable,and whether the third party is entrusted to exercise the right of inspection.Specifically,the company can carry out the examination of "improper purposes" from the following aspects.Investigation:(1)whether the exercise of the right of inspection is directly related to the interests of shareholders;(2)whether the exercise of the right of inspection damages the legitimate interests of the company;(3)whether the exercise of the right of inspection is a necessary means for shareholders to realize their shareholders’ interests and is irreplaceable;(4)whether the purpose of the exercise of the right of inspection is specific,and whether the shareholders need to show to the company what purpose they are applying for access to the accounts.Books should not be applied for on the basis of a general understanding of the company’s operating conditions and other reasons;(5)whether the exercise of the right of access is intrinsically related to the company’s major business management and other issues.In the aspect of introducing the "inspector system" to weaken the recognition of "improper purpose",this paper argues that one of the main reasons for the contradiction between shareholders and companies in the exercise of the right of access is the "crisis of trust".For example,the shareholders do not trust the company’s management decisions and the earnings from their equity fully reflect the actual operating income of the company,while the company’s principles.Shareholders are strongly wary of the purpose of obtaining their "trade secrets".The essence of the problem is that mutual trust is insufficient.In this regard,the author suggests introducing the "third party" intervention,namely the "inspector system".In the aspect of reasonable distribution of burden of proof,besides putting forward some thoughts and suggestions,this paper argues that it is difficult for courts to distribute the burden of proof reasonably,regularly and uniformly when trying cases on the basis of lacking detailed and operable legislative basis.Whenever faced with such a complex situation,the author will recall that the case law countries can make up for the problem of excessive discretion of judges by establishing a typical case bank.Most of the disputes between shareholders and companies are complex,the types of problems are numerous,and the expertise required by the cases are different.These objective realities urge us to establish a case-law system applicable to the current legislative system and judicial environment in China.In fact,in many areas,within a certain range,we have already had similar practices,but this practice has not yet formed a system for the determination of the improper purpose of shareholders’ right to access the books.