On The Construction Path Of The Control Shareholder Centrist Model

The problem of controlling shareholders in China is prominent and contradictory.Abuses of control by controlling shareholders include oppression of minority shareholders,connected transactions,usurpation of corporate opportunities and malicious transfer of control.The controlling shareholder also has a positive effect on the development of the company,and he or she holds the control of the company with due process in accordance with the law.The current corporate governance system in China is difficult to play an effective role: the problem of controlling shareholders is particularly serious in closed companies,but there is a lack of legal regulation;in the process of judicial practice,it is difficult to determine the invalidity of the resolution of the shareholders’ meeting of the company or to revoke the resolution;the application of the right to request for share repurchase by dissenting shareholders is harsh,and it is difficult for non-controlling shareholders to withdraw from the company.The fiduciary duty originates from the trust system in England,and a large number of legal relationships with trust characteristics are recognized as fiduciary relationships,and the fiduciary duty is widely used,which includes the duty of fidelity and diligence.The U.S.states regulate the behavior of controlling shareholders in three ways:shareholder oppression clauses,inter-shareholder agreements and fiduciary duties;the U.K.courts affirm that controlling shareholders have corresponding obligations to noncontrolling shareholders,but do not specify such obligations as fiduciary duties,while adopting systems such as shadow directors to protect the rights and interests of noncontrolling shareholders.The regulatory measures in the U.K.and the U.S.are mainly aimed at the controlling shareholders of closed companies,with specific analysis of whether the controlling shareholders abuse their control rights in individual cases;both countries have constructed the corresponding regulatory systems from their own characteristics;the fiduciary duties of controlling shareholders have not been closely argued in both countries.The fiduciary duty can fundamentally regulate the behavior of controlling shareholders and include various situations of abuses by controlling shareholders;in contrast,the shadow director system in the UK is not consistent with the reality of shareholder centrism in China,and it is difficult to prove the directive behavior of controlling shareholders and cannot solve the problem of shareholder oppression;whether controlling shareholders have a fiduciary duty is widely divergent in Chinese academic circles,which slows down the legislative process for controlling shareholders.This has slowed down the legislative process of regulatory measures for controlling shareholders.Control shareholders do not make express or implied fiduciary commitments,and without legislative provisions,there is no fiduciary relationship between control shareholders and non-control shareholders,and fiduciary obligations should be given to control shareholders by establishing a control shareholder centrist model.The shareholders of the closed company should be allowed to agree in the initial articles of incorporation or with the unanimous consent of all shareholders that the company applies the controlling shareholder centrist model,and the controlling shareholder may exercise the shareholders’ meeting authority alone to make resolutions,and it only needs to notify the other shareholders of the content of the resolution and record it in writing,and at the same time make appropriate modifications for the cases where the resolution is not established,invalid or revocable.Under the controlling shareholder-centric model,the controlling shareholder shall assume the fiduciary duty.When the controlling shareholder usurps the opportunity of the company,conducts related transactions to the detriment of the company’s interests,or misappropriates the company’s property,the controlling shareholder shall be judged to have breached the duty of loyalty;the duty of diligence of the controlling shareholder shall not be lower than the standard of the duty of diligence of the directors.A noncontrolling shareholder who reasonably expresses his or her opposition after the date of knowledge of the resolution made by the controlling shareholder is a dissenting shareholder,and the time limit for exercising the right to request share repurchase shall start from the date of knowledge of the content of the resolution.When the controlling shareholder transfers control,or the company fails to distribute profits to shareholders for three consecutive years as agreed in the articles of incorporation or as required by law,and the company is profitable for three consecutive years,the non-controlling shareholder may request the company to repurchase its shares in accordance with the statutory conditions for distribution of profits.