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A Review of the Provisions Supplied By recently Amended PRC Company Law to Protect Shareholders’ Interests

     This mechanism makes for conciliating interests of both sides. On the one hand, majority shareholders are able to make substantial decisions when acquiring more than half or two-thirds of all voting rights. On the other hand, minority shareholders who are unwilling to accept momentous transformations have the right to quit. It can safely be an important protection for minority shareholders against a change of state of affairs in which they do not have any opportunity to fully participate. But now the problem is how to come to an agreement with a reasonable and equitable prize of the dissenting shares. The recently amended CCL does not design a relatively explicit criterion for the trial court judges. They may be troublesome in settling the dispute between minority shareholders and the company controlled by majority shareholders.
     Legislators should not authorize the judicial branch to interpret the equivocations with the vital discretionary powers except under few unavoidable situations.
 D. Corporation Deadlock
 Sometimes the conflict of shareholders’ interests is so impetuous and irremediable. Then it comes to shareholders’ meeting deadlock, when the company is in a state of stagnancy because shareholders are uncompromisingly dissident during the voting.
     This is a type of corporation deadlock.
 The recently amended CCL provides that shareholders who own more than 10 percent of all voting rights have the right to initiate a lawsuit to claim dismissing the company if (1) there are serious troubles on the management and (2) shareholders will suffer a fatal loss if continuing and (3) this embarrassment can not be resolved by other means.
    
 This breakthrough in our company law will have a significant influence on judicial remedy to corporation deadlock. Basically, majority shareholders are competent to safeguard profits by themselves. So the heart of legal protections is spontaneously diverted to the side of minority shareholders. It is likely that minority shareholders form a rival faction within the corporation which is strong enough to counterwork majority shareholders’ abusive controlling right. If the minority finds the fundamental purposes of the company can never be realized, they have an automatic right to claim to dismiss the company, supported by the theory of potential interests.
     This right deprives majority shareholders of the unlawful privileges to engross company assets and compel minority shareholders to obey their rules. Nevertheless, the mechanism of dismissing the company has several demerits both in substantiality and procedure. So any benefits from this rule would be small. Firstly, it is excessively costly for some companies, especially those ones which have brilliant perspectives. Why don’t we try an alternative method? Secondly, the recently amended CCL fail to design “a system juncture”
     between the right to require the company to redeem all the shares and the mechanism of dismissing the company. The compulsive redemption should be a prior procedure before dismissing the company by the court. This argument is found on the principle of maintaining the juridical person.
    
 E. Shareholders’ Rights to Know the Insider Information
 Shareholders have the right to know the inside stories and monitor their company availably. While the company have the obligation to disclose information on a expedite basis. It is a coin with two faces.
 Previously, controlling owners were invigorative to monitor firms with the purpose of maximizing their own interests. Minority shareholders, however, were less incentive to participate. It was mainly because of the poor mechanism provided by CCL (1993).
     Accordingly, the recently amended CCL makes great efforts to break through. Now shareholders have the right to inspect and copy the articles of incorporation of the corporation, minutes of shareholders’ meetings, resolutions of board meetings and fiscal reports. And they can require checking the accounting books


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