Abstract

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Keywords:: controlling shareholders; fiduciary duty; shadow director; shareholder oppression; affiliated transactions

Abstract:: A clear definition of the controlling shareholder's duty lies in the distinction between controlling shareholders as the owner and controlling shareholders as the manager. The duties born with controlling shareholders as the owner is substantially regulated by torts, and the corporate law at this level focuses on the affiliated transactions of controlling shareholders. The controlling status itself does not generate fiduciary duty, and the identity switch to manager as well as the definition of shadow director should be strictly formulated. On the one hand, the regulation of controlling shareholders in corporate law shall follow the board-centric principle, and the duties as well as liability of controlling shareholders in corporate business decision-making are derived from those of directors. On the other hand, this regulation is a system in which the shadow director, affiliated transactions and shareholder oppression are combined. Article 191 of the Bill to Revise the Company Law of the People's Republic of China essentially follows the logic of joint torts in civil law, and fails to incorporate the exercise of corporate power by controlling shareholders into the power and accountability of organization law.