An Empirical Study On The Fiduciary Duty Of Controlling Shareholders

Due to the high level of equity concentration in Chinese companies,the issue of the interest of the company,other corporate shareholders and external shareholders being invaded by the controlling shareholder by taking advantage of their controlling position is more significant,which is also diverse and complicate in recent years.Usually,the controlling shareholder has a high degree of closeness with the company’s interests,so they will pay more attention to the company’s profitability and sustainable development.However,while controlling shareholders can control the company to maintain their rights maximally,it open the way for embezzling the corporate assets.And the issue of the minority-shareholder’s interests being cut by the controlling shareholder is difficult to avoid under the China’s company governance system.Well-defined power and responsibility of controlling shareholders is an important and difficult point for the protection of the minority-shareholder’s rights and interests and the establishment of the corporate governance system.Conferring fiduciary obligations to controlling shareholders is an important approach to clear the boundaries of controlling shareholders’ rights and responsibilities.The current laws of our country have not clearly confirm that the controlling shareholder should bear the fiduciary duty,only regulating them in terms of related transactions and liquidation,which is far to meet the needs of the development in the economic field.Through research methods such as comparative analysis,case analysis,literature analysis and so on,this dissertation conducts an empirical study on 41 sample cases filtered on the China Judicial Documents Website with the keywords "controlling shareholder" + "fiduciary duty",it can be founded that the identification of the controlling shareholder is too mechanical,paying more attention to forms rather than substance,judicial review standard is in lack,and the fiduciary duty system of controlling shareholders has not been established,which is not advantageous to remedy the legitimate rights and interests of the company,minority shareholders and company creditors.Although the two company law drafts published after 2021,strengthening the restrictions on controlling shareholders,which fails to solve the problem such as judiciary standards,the legalization and systematization of the controlling shareholders’ fiduciary duty.It can’t effectively realize the goal of comprehensively curbing the abuse of dominant position by controlling shareholders from regulation of the obligation to the responsibility followed-up in the end or further improving the relief mechanism of relevant interest groups.Therefore,in order to effectively prevent and reduce the abuse of dominant position by controlling shareholders and improve the accuracy of judicial review,stipulating the fiduciary duty of controlling shareholders clearly is suggested.Unless the controlling shareholders can prove that there isn’t any abuse or damage by using association relations,they should be liable for the compensation of the company and its shareholders,and jointly and severally liable for losses of its creditors.