Research On Dual Shareholder Representative Litigation System

The system of ’Dual Shareholder Representative Litigation System’ originated in the United States,which means that in a parent-subsidiary company,when the benefits of the subsidiary company are infringed by law,and the organization of the parent company or the subsidiary company refuses or fails to file a lawsuit,so that the benefits of the subsidiary company can not be remedied,in order to protect the legal benefits of the subsidiary,the shareholders of the parent company bring a lawsuit on their behalf.The essence of this system is an exception to the principle of ’Just plaintiff’ in civil action.The existing supporting theories of this system include ’Piercing the corporate veil’ and ’Common control theory’,the introduction of the system can be based on the ’Denial of corporate personality theory’,’Asset division theory’ and ’Loss of expected benefits theory’ of three theories.The United States and Japan are the two most representative countries in the extraterritorial legislation.The United States dual representation litigation holds that the system is applicable to the parent-subsidiary companies with controlling relationship,and the plaintiff should meet the exceptional requirements of holding shares and continuing holding shares.Japan,as a country of civil law system which has already constructed the system,considers that the system is applicable between the ultimate wholly-owned parent company and the important wholly-owned subsidiary company,the plaintiff shall be a shareholder who has continuously held more than 1%of the voting rights or issued shares of the parent company for the preceding six months.The main enlightenment to our country is that the starting point is ’Wholly-owned subsidiary’,the plaintiff’s qualification should be limited by the holding period and the holding proportion,and the pre-procedure can be initiated in double order.At present,our country does not have the dual representative action system,but because the shareholder’s representative action has the difficult position which can not be applied between the parent company and the subsidiary company,the subsidiary company can not obtain the relief through the shareholder’s representative action in the current judicial practice,it is necessary to introduce the dual shareholder representative litigation system to make up the deficiency of the current regulation that the lawsuit of parent company’s shareholder on behalf of subsidiary is rejected.At the same time,China’s shareholder’s representative litigation system has been established for more than ten years,with relatively mature legislative provisions and judicial interpretations,articles 31 and 35 of the judicial interpretation of company law(that draft for soliciting opinions)also made an attempt to support shareholders to bring representative action for wholly-owned subsidiaries,and the extraterritorial legislation and relevant theories can also provide some external references,all these are the favorable conditions for the introduction of the dual representative action system in our country,and show the feasibility of the system in our country.When constructing the system of dual shareholders’ representative action in China,the applicable conditions may be considered between the parent company and the subsidiary company which is wholly-owned and controlled,the plaintiff shall be a shareholder of a limited liability company and a joint stock limited company who alone or collectively hold more than 1%of the shares of the company for more than one hundred and eighty consecutive days,the defendants include directors,senior managers,supervisors and external third persons who can exert substantial influence on the company.The pre-procedure adopt double order of ’subsidiary company then parent company’.