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On the shareholder derivative litigation incentive and restraint mechanisms

Author: WangZuo””WangYanZeng From: www.yourpaper.net Posted: 2009-11-10 20:16:51 Read:
[Abstract] shareholder derivative litigation is a more distinctive corporate law litigation system, major shareholders and directors of the behavior in the specification, special role to safeguard the interests of minority shareholders. China's new "Company Law" this Notwithstanding the provisions, but there is still insufficient. SOE restructuring of old industrial bases in northeast China as the background, and analysis to research how to sue the behavior of shareholders in the shareholder derivative litigation system incentives and restrictions to protect its real departure from the overall interests of the angle of the Company filed a lawsuit for the northeast old industrial base of state-owned enterprises restructured to provide strong legal support.
[Words] shareholder derivative litigation rights of shareholders restructuring state-owned enterprises

A shareholder derivative litigation system origin

Shareholder derivative action Companies Act more distinctive in the field of a litigation system, it is when the interests of the company by the controlling shareholders, directors and other senior management personnel against indolent investigated infringe on the responsibilities of the compliance with the statutory conditions proceedings for the interests of the company shareholders in their own name, be held to infringe liability litigation system. The system originated in the Anglo-American jurisprudence equitable, common law courts in the United Kingdom in 1843 by the trial on FossV.Harbottle case, further defined the majority of the corporate governance rules and internal management rules. These two rules are collectively known as the the Foss rules, the largest shareholder abuse of power against the interests of the company and the company's management, Foss rules does not make the effective maintenance of the company's interests. The exception applicable Therefore, in order to make up for the lack of common law and stiff, the British Court of Chancery to create a series of Foss rules, directors of breach of fiduciary duty to try to make the direct object of the demands of shareholders, and used for the first time in 1975, a shareholder derivative action concept.
Shareholder derivative litigation made large-scale development in the United States. In 1881, the United States denied Foss rules established historic "equitable rules allow small and medium-sized shareholders as the interests of the company filed a shareholder derivative litigation of minority shareholders oversee the company from operating activities, important legal means to prevent the abuse of power by the largest shareholder . Mechanisms as a way for a person responsible for the company's litigation, shareholder derivative litigation known as a genius invention of the common law countries. The level of protection of the interests of minority shareholders has also become a test a company law maturity, just touchstone. After the civil law countries to develop their Company Law is also commonly used in the system.

Two, the practical significance of the shareholder derivative litigation: perfect SOE restructuring corporate governance structure

The deepening of restructuring state-owned enterprises has been a key link in China's northeast old industrial base in the reform process. The revision of the Companies Act, focused on in this regard established many useful system, including shareholder derivative litigation system has a strong practical significance to improve the state-owned corporate governance structure.
The reform of China's state-owned company with shareholding system transformation, "Debt" practice, management buyouts, employee stock ownership system "and other forms, but no matter what form of state-owned shareholding system transformation, the final restructuring results are almost always due to the dominance of state-owned shares, this business model can not adapt to the vastly different state-owned enterprises, triggering a series of follow-up questions. According to the decision of the CPC Central Committee on a number of major issues of reform and development of state-owned enterprises "," industry involving national security, natural monopoly industries, provide important public goods and services industry, as well as pillar industries and high-tech industries, key enterprises depending on the particular needs of the wholly state-owned or state holding more than 51%; should significantly reduce the proportion of state-controlled state-owned enterprises in countries that do not need the industries and areas controlled by the state-owned economy, the state-owned shares transfer of all or substantially to natural persons, corporate enterprises other than state-owned enterprises to absorb the multi-party investment entities to achieve equity diversification.
Caused the transformation for state-owned enterprises classification, regardless of the legal form, shareholder representative litigation system has applications space. Shareholders Centrism "in the modern corporate system" into the centrism of the Board of Directors, the Board of Directors of the quality for the state-controlled state-owned enterprises, whether a director is active to fulfill their obligations to protect the performance of the company, the key to achieve the interests of the shareholders. Shareholder derivative litigation system for shareholders in the company's internal relief methods provided with the judicial power of a to pursue effective way liability diligence on the contrary, the directors of the duty of loyalty, state-owned shareholders can effectively protect the interests of the company shall be inviolable, and the protection of state-owned assets increase their value. Similarly, in diversifying the stock of state-owned enterprises, state-owned shares may only of minority shareholders in the company, then the largest shareholder misconduct constraints correction capital alienation of the majority, thereby protecting the interests of minority shareholders, that is, the protection of state-owned assets from infringement imperative. Shareholder derivative litigation system this can play the role of the most essential requirements against the interests of the company's shareholders by small shareholders in the form of joint litigation, the Company's liability and, indirectly, to protect their own interests.
As can be seen from the above analysis, shareholder derivative litigation system can promote the improvement of corporate governance structure, and thus preventing the loss of state-owned assets in the process of restructuring in the state-owned enterprises, is the SOE Reform smoothly powerful legal weapons, so the transformation of the old industrial area in the northeast process, should this system in-depth study, so that it can really play the supporting role of the legal system.

The implementation of the dynamic of shareholder derivative litigation due to: encourage the design of the mechanism

Shareholder derivative action to be able to seek the company external judicial power of correction and optimization of the structure of corporate governance, the balance controlling shareholder and minority shareholders of both forces, strengthen the supervision of the directors, managers and other personnel in the leadership of the company directors, supervisors and senior management The power to form a real and effective constraints and supervision activities, to create shareholder derivative litigation system is necessary in our country. However, since the promulgation and implementation of a new leaf "Company Law", the shareholders filed derivative lawsuits rarely occur, because the very huge litigation costs faced by the shareholders to start the program, in favor of the benefit of the company. That is because the true shareholder derivative litigation oversight procedures need to be mobilized incentives. Even if the United States is such a "good v. country, this is also the same attention. Such as law, shareholder derivative litigation in favor of the entire class of human or entities where he and others benefit, then the plaintiff's reasonable legal fees can be extracted from the compensation. "China's" Company Law " shareholder derivative litigation systems in some provisions, but the lack of incentives sue shareholders, result in practice ineffective, should the following aspects perfect.
1. Plaintiff shareholders directly for repayment of
Shareholder derivative litigation results in accordance with the Companies Act theory, attributed to the company, but, in some cases, in favor of the plaintiff, the damages in order to be able to make real benefit shareholders of the no-fault and other interests of the creditors of the company and the company does not infringe under the premise of relevant interests, in favor of the shareholders in proportion to their holdings in favor of the interests of the income distribution provisions enjoy direct repayment. Otherwise, even if well-intentioned shareholder litigation, there is likely to reach the litigation purposes, because the shareholder derivative action is internal misuse of company property. At this point, the favor of the benefit of the company, will enable recovery after the property is under the control of the internal human again. And derived litigation innocent shareholders and shareholders fault. The favor of the interests of due entirely to the company, the shareholders fault and no fault of shareholder equality and the repayment of debt situation, even the defendant against the interests of the company shareholders instead its own pay compensation benefit This is undoubtedly unfair, contrary to shareholder derivative litigation system was originally designed. 2 in favor of the plaintiff litigation costs compensation provisions
According to China's Civil Procedure Law ", in favor of the plaintiff only require the defendant to pay the legal costs of litigation prepaid. As for the attorneys 'fees, investigation fees, other costs will still be borne by the plaintiff, shareholder derivative litigation attorneys' fees are usually higher, in this case, and no doubt will hit shareholders sue enthusiasm. The cost of the huge litigation costs, to shareholders in terms of the lack of incentives; Moreover, litigation costs borne by the individual plaintiff shareholders, but in favor of the result is shared by all the shareholders, shareholders sue is also difficult psychological balance. This problem is not solved, will be difficult to play the role of the shareholder derivative litigation system. In order to protect the interests of the plaintiff shareholders, to avoid personally assume all risk of litigation and to enhance shareholder filed a derivative action actively, it is necessary to give its litigation costs compensation claims.
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