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

　IV. REDRESS FOR GRIEVANCES
　A. Shareholders’ Derivative Suits
　Compared with CCL (1993), one of innovations initiated by the recently amended CCL is the establishment of shareholder’s derivative suit.
　　　　 When directors, supervisors, or other senior managers breach the fiduciary duties of care or loyalty, an individual shareholder, typically a minority shareholder, has the right to bring suit in the name of the corporation against those irresponsible individuals if: (1) he has held more than 1 percent of all stocks for consecutive 180 days; (2) he has made a written demand on the board of directors or supervisors before commencing the derivative suit;
　　　　 (3) the board of directors or supervisors refuse to initiate a lawsuit or keep silence for more than 30 days.
　This reform not only provides majority shareholders with the right to seek remedy when confronting directors’ dereliction of duty, but also protects minority shareholders'' rights to have effective means for obtaining redress for grievances at a reasonable cost and without delay when the board controlled by majority shareholders fails to perform appropriately on the matters such as self-dealings, prize manipulation, disclose of false information etc.
　However, maybe this mechanism is not for minority shareholders’ benefits in practice, considering their difficulties. They usually lack incentives principally because the burden of proof lies with the plaintiff, which means the weaker almost can not win. To say the least, all payments made in connection with the derivative action must be received by the corporation rather than the plaintiff. Claiming legal costs may require another lawsuit which minority shareholders are reluctant to continue.
　B. Shareholders’ Direct Suits
　Shareholders’ direct suits supply them with direct remedies, which are usually filed right against directors, controlling owners, or the company for damages done to the shareholders.
　　　　 Different from derivative suits, there are strong incentives for both majority and minority shareholders to initiate a direct suit. It can present a credible threat to the directors who are out of their senses in order to uphold the majority shareholders’ legitimate rights to control the company. A mass of minority shareholders can bring a class action suit, which is one type of direct suit, to prevent oppression of them, compel inspection of the company’s books and records etc.
　The conservative may argue that this kind of lawsuit has a potential for abusive or frivolous litigations and overly cautious projections by management on business prospects merely for fear of litigation. I think, however, the real situation in our country is: the protection of minority shareholders’ rights is too powerless
　　　　 ] to have the potential for abusive litigations. The rewards, moreover, can make up for losses and legal fees of minority shareholders by lawyers specializing in the direct suit. The recently amended CCL should have stridden forward to expand the fields where direct suits can be applicable. For instance, shareholders should have the right to file a complaint to enforce holder’s voting rights, compel the payment of dividends; prevent management from improperly entrenching itself etc.
　V. CONCLUSION
　This essay examined the provisions of the recently amended CCL concerning the balance between the rights of the majority shareholders to control PRC companies and the protection of minority shareholders from abuses of those rights to support my viewpoint that the recently amended CCL has achieved a great success on the protection of shareholders’ rights but still has a long way to go. Of course, in such limited space, my purpose was not to propose how this should be done but simply why. I have tried my best to analyze the related provisions in a dialectic manner and pertinently pointed out gains and losses.