Research On Internal Liability Of Related Party Transactions

While reducing transaction costs,improving transaction efficiency,ensuring transaction security,and maximizing group benefits,related party transactions,however,it opens the evil door for directors,supervisors,senior managers,controlling shareholders and actual controllers to seize the benefits of the company."Enron scandal in the United States","Qiong Minyuan" and a series of related-party transactions shocking,thought-provoking.The huge social harmfulness and the existence universality of unfair related party transaction make it get the world wide attention.On the issue of restricting unfair related-party transactions,the compensation system that can protect the victims in an all-round way in the legal system is the compensation system for the injured party.Only the internal compensation system in civil related-party transactions can fully protect the rights and interests of companies and small and medium-sized shareholders,and can act as a deterrent to unfair related party transactions.This paper makes an in-depth analysis of the internal liability of related party transactions through the methods of empirical study,Comparative Study and Legal Hermeneutics.The first part analyzes the nature of related party transactions,which reflects two major conflicts of interest in corporate governance agency problem,that is,the "principal-agent" relationship between the "owner and operator" and the "principal-agent" problem between the controlling shareholder or the actual controller and the medium and small shareholders lead to a serious imbalance in the rights and obligations of the insiders,easily lead to "insider control".Through the definition and analysis of related party transaction and internal compensation liability,it is considered that the related party transaction is actually a transaction controlled by the insider,who can easily take advantage of the control of the company,which leads to the occurrence of unfair related party transaction.The internal compensation responsibility of related party transactions is the responsibility of the law to compensate the insider who abuses the right of control and damages the company’s interests.Finally,through the actual investigation of the judicial status quo,the author puts forward the problems which need to be solved urgently in the implementation of the law.In the second part,by collecting and studying the relevant cases of related party transactions,the author analyzes the controversial issues in practice one by one,and holds thatthe internal and external liability of related party transactions are independent respectively,which is based on different basis of right of claim,different claim to different subjects in order to achieve the same interests of legal relief.They do not produce the legal effect of "Ne BIS in Idem" and the interruption of the limitation period.By considering the principle of the substantive review of related party transactions,it is believed that the due process review of related party transactions can not be neglected.The third part puts forward the reasonable suggestions for the legal governance of the internal compensation of related party transactions.It holds that the necessary conditions to ensure the fairness of related party transactions are information transparency,fair procedure and fair price.The identification of the subject of internal compensation liability in related transactions should be based on the principle of substance identification over form identification.Therefore,it is necessary to analyze and propose the distribution of the burden of proof of related party transactions,on the basis of the civil rule of proof "who claims,who gives evidence",to endow the insiders who fail to perform the obligation of information disclosure and approval with the burden of proof of substantial fairness of related party transactions.