A Review of the Provisions Supplied By recently Amended PRC Company Law to Protect Shareholders’ Interests-法搜-中国法律信息搜索网

　　　　 Legislators enact laws to seek “the light of equation shining in the dark”. We must set a series of reasonable restrictions on majority rule. Because the majority does not mean all while the minority does not mean penniless. So the recently amended CCL provides that any shareholder who abuses his rights in trespassing on interests of the company or other shareholders should bear the compensatory responsibility.
　　　　 It demands majority shareholders to adequately calculate minority shareholders’ gains and losses when they are exerting their controlling powers. The special protection of shareholders’ rights is an important legal principle in the recently amended CCL.
　　　　 The principle of honesty and the doctrine of virtuous morality in the civil law
　　　　 both demand that majority shareholders ought to shoulder the duty to respect minority shareholders’ interests and control their company in good faith.
　　　　
　B. Majority Shareholders’ Duties
　It conduces to improve corporate governance if the law imposes majority shareholders fiduciary duties with respect to minority shareholders. The duty of fiduciary includes the duty of loyalty and the duty of care. The former means majority shareholders should act in the interests of the company rather than in their own benefits; the latter requires them to try their best to make good decisions which concern the life and death of company.
　　　　
　The recently amended CCL provides that controlling shareholders or the factual controlling owners
　　　　 should not trespass on the interests of the company by making use of their interested relationships
　　　　 . The controlling shareholders are those who hold more than 50 percent of all voting rights. They need not any supports of minority shareholders to make decisions except for certain absolutely important cases.
　　　　 According to a substantial standard, those who hold enough stock to have a significant impact on decisions of the shareholders’ meeting are also controlling shareholders.
　　　　
　This reform can control the tortuous wrongdoings of majority shareholders to a great extent. The recently amended CCL, however, still lacks systematic duties of fiduciary. The logic of legal norms is still imprecise. We should have comprehensively introduced the mechanism of duties of fiduciary. The duty of care is a positive act. It demands the majority shareholders to serve for the company’s interests according to the business judgment rule.
　　　　 The board controlled by majority shareholders completely dominates the company’s agendum. So majority shareholders must behave with that level of care which a reasonable person in similar circumstances would use. The duty of loyalty, however, is a negative one. It requires majority shareholders avoid “moral risks”.
　　　　 Most importantly, we should make sure (1) whose trustees majority shareholders are and (2) what the liability for violations of the duty is.
　　　　 The company law should forbid actions of majority shareholders which are badly against the duty of loyalty, such as manipulation of prize or fiscal reports, mendacious contributions, unlawful disclosure of important information, unfair self-dealings, misappropriating capital of listed companies etc.
　C. Dissenting Shareholders’ Rights
　When the minority dissents some extraordinarily important resolutions proposed by the majority, laws can not compel the dissenting to undertake the unbearable weight. Based upon this legal philosophy, the recently amended CCL provides that dissenting shareholders have the right to require the company to redeem all shares they own if they oppose the passage of resolutions of the shareholders’ meeting concerning the following matters: merger (or separation) of the corporation, sale of crucial assets, or no distribution of retained earnings in consecutive five years etc.