The basic facts of the case:

Hongsheng coal company shareholders by the plaintiff and defendant Wang Wei Zhang Mingliang and other 8 members, among them Wang Weizhan investment ratio of 12%, Zhang Mingliang accounted for 60%, the shareholders' meeting to elect Zhang Mingliang as chairman, the legal representative. Hongsheng coal company prospectus: the board of directors, the manager may not misappropriate company funds or funds for lending to others. The board of directors not because of objective reasons making mistakes or in violation of the law and cause damages to the company, shall bear the liability of compensation.

In January 7, 2007, Zhang Mingliang without the shareholders' meeting, board of directors agreed to lend, the company 3800000 yuan in a coking plant. After the coking company to repay the loan. Then, Wang Wei to the supervisors Hongsheng coal company will request in writing to sue Zhang Mingliang, the board of supervisors refused Wang Wei request. May 15, 2008, the plaintiff to the defendant Wang Wei Zhang Mingliang to lend to Hongsheng coal company caused huge losses of 3800000 yuan on the grounds, to the courts, requires the defendant Zhang Mingliang compensation Hongsheng coal company loss 3800000 yuan.

The focus of this controversy is:

(a), Wang Wei is not the proper plaintiff: suffered property damage in this case is the Hongsheng coal company, and Wang Wei is the company's shareholders, have no direct interest in the case, not in conformity with the provisions of the Civil Procedure Law of our country. What is Wang Wei filed a lawsuit based on?

(two), Zhang Mingliang whether coping Hongsheng coal company liability: Zhang Mingliang as the statutory representative Hongsheng coal company, have the right to make decisions on the company's business activities. Decision fault consequences shall be borne by the company or by the legal representative person bear?

After the court hearing, the plaintiff Wang Wei as Hongsheng coal company shareholders, the board of supervisors in the written request to prosecute without fruit a month later sued the defendant Zhang Mingliang Hongsheng coal company to assume the liability of compensation, in accordance with China's "company law" the 152nd regulation, according to law. The defendant Zhang Mingliang as Hongsheng coal company chairman, without the shareholders meeting or board of directors agreed that, in violation of the state financial regulations and the articles of association of the company, the company will fund lending to others, thereby causing losses to the company, should bear the corresponding liability. The court decided in favour of the plaintiff Wang Wei claims.

In the case of a typical case of shareholder representative litigation. In this paper, the problems of cases involving the shareholder lawsuit on behalf of the analysis, to have a more comprehensive understanding, more clear on the shareholder representative litigation system. In order to handle relevant cases without "missing fog up the house, maze du".

The necessity, the shareholder representative litigation system establishment

In China's specific social and cultural environment, rule consciousness light in friendship, the establishment of such a fact that does not dispute contributes to company but is not conducive to the operation of the company. Chinese traditional culture emphasizes moderation, tolerance, Friendliness is conducive to business success., which is conducive to creating a harmonious atmosphere of cooperation among the shareholders; "dear brothers, Ming accounts", and highlights the benefit relations explicitly in the interpersonal relationship in importance; "are not for the others, stand condemned by God", "people die for money, birds die for food" it reflects the selfishness of human nature level; "one boy is a boy, two boys half a boy, three boys no boy" of proverbs in the absence of rules environment people trying to escape the obligation of inert. In this piece is full of contradictions and rational soil, the market economy system launched a limited liability company, the shareholders capital cooperation, friction, friendship, management in one economic entity, shareholder rights legal advocacy shareholders equality and unit share the equal, but the company's actual dominator in consciousness often from the psychological path "official standard" starting the habit of judgement and decision. The controlling shareholders are more interested in is established between internal departments, and their own personal attachment relationship, let them to obey the oneself than to let them according to the established rules is more important. A very interesting phenomenon is the status of company of small shareholders in the company's far better than the company in the middle business person in charge. Is a serious violation of the rights of small shareholders under the condition of small shareholders, allows the assignment cannot be interest no controlling shareholder, even not to see the company's financial accounts, transfer of shares can not be achieved, withdraw investment and not by the company law, many local courts do not even accept small shareholder lawsuits or after accepting not found. Compared with the western capitalist system, limited liability company controlling shareholders by shareholders and directors of small control violations, the tragic extent of minority shareholders in China Co. Ltd. in violation of the more aggravated.

Be in the protection of minority shareholders background maintenance investment safety and investment confidence, the beginning of 2006 the implementation of the new "company law of the people's Republic", for the first time in China in the form of legal recognition of shareholder representative litigation system, demonstrates the further improvement of our country's legislation, the shareholder representative litigation also provides a new and effective way for the rights and interests of the protection of the rights of shareholders.

    Shareholder representative litigation, is when the company's interests from violation of others, especially by the controlling shareholders, directors and other management personnel of the infringement, if the company fails to take action or litigation, legal conditions of shareholders may represent the company, against the infringe lawsuit. The system is derived with the continuous improvement of its corporate governance and control measures, the purpose is to restrict controlling shareholders and other company decision-making layer perpetrate whatever evils one pleases, thereby protecting the interests of the company, maintaining the legitimate rights and interests of minority shareholders.

   Shareholder representative litigation originated from the Anglo American common law, as a kind of equity measures developed in nineteenth Century. Britain and American took the lead in the equity created shareholder representative litigation system, the French court in 1893 allowing shareholders to exercise the right of representative lawsuit, Japan in 1950 revised "commercial law" provisions of the shareholder representative litigation system, and in 1993 in order to strengthen the protection of shareholders' rights is modified, there are relevant regulations in Germany, Spain Philippines, and Taiwan province of china.

From the perspective of corporate governance, and balance the various rights is an important content to realize the scientific management of the company. As the case, the legal representative of the company or borrowing behavior, damage is the interests of the company. Similar behavior: the company as a defendant refuses to participate in the proceedings, and the consequences of litigation has great risk of compensation etc.. If the company fails to or unable to exercise rights, the law should endow the shareholders have some means of relief, vacancy to fill the right drive, otherwise the controlling shareholder or other control managers will perpetrate whatever evils one pleases, the interests of small shareholders will be unsettled. There is a right there is a modern legal concept constraints, the controlling shareholder of frequent tort lack corresponding means, the real should not. In this regard, the establishment of shareholder derivative litigation system, to protect the interests of small shareholders imminent, the long-term healthy development, standardized security this is our company to.

   Two, the legal attribute of shareholder representative lawsuit

    The shareholder representative litigation with subrogation and representative of the double attribute of the law. The subrogation refers to the action that is based on a common benefit right, not its cause of action belongs to the organization members as shareholders own, but belongs to the whole company, win effect is avoided for the company benefits or losses, so from the right of action for the purpose of view, apparently belonging to the an indirect action, direct action and shareholders because of company of infringement on rights and an essential differences exist, the very obvious. The representative is refers to the addition of the plaintiff shareholder lawsuit, company and other shareholders, to prevent and avoid multiple litigation, litigation plaintiff shareholder effectiveness are provisions of the legislation in the world and the company and other shareholders, the representative will give the plaintiff shareholder lawsuit, and this representation is group litigation or representative nature of litigation, therefore, representative obvious.

 Three, the plaintiff qualification of shareholder representative lawsuit filed

The shareholder lawsuit on behalf of the main purpose is to protect the interests of the company, to prevent damage to the interests of the company. But the shareholder is the representative of the company to exercise their right to appeal, if shareholders abuse the right of action, there may be shareholders the right personal interests, destroys the normal order of production or damage the company reputation behavior. Therefore, many countries have stipulated some preconditions to mention the shareholder representative litigation, the restriction on the plaintiff qualification is one of them. Such as the "Model company" America method requires the plaintiff shareholder is the prosecution of misconduct had registered shareholders. Japan's "company law" stipulates that "6 months ago has continuously held by shareholders, may bring a director's liability for the company in written form the requested action". China's new "company law" for the limited liability company and Limited by Share Ltd have different rules, the Deputy litigation plaintiff is defined as: (a) the shareholders of limited liability company, which filed shareholder representative litigation without qualification; (two) the Limited by Share Ltd shareholders holding time and holding the number of restrictions, only 180 consecutive day above separately or together hold 1% or more shares of the company is shareholder representative litigation.

Four, "the exhaustion of Internal Remedies" principle.

Shareholders have filed a lawsuit on behalf of the plaintiff qualification, is not equal to the shareholders Deputy litigation can immediately on behalf of the company in the company suffer from improper infringed upon. Many countries and regions of the law on the shareholder representative litigation provisions of the preceding procedure. Only the company refused or delayed in exercising its right of appeal to safeguard their own interests, to allow shareholders deputy litigation. That the plaintiff shareholder in the prosecution of the former, we must first ask the company authorities to take measures, otherwise can not bring up the representative litigation. American law principle, after the exhaustion of internal remedies to shareholders of the Limited by Share Ltd in the prosecution of the former. There are two ways: one is submitted to the board of directors, the two is a request to the general meeting of shareholders. Only these two ways to end, the plaintiff to file a lawsuit on behalf of. "The Japan Inc law" stipulates: the company received shareholders held director's liability for the company in writing litigation request does not bring an action within 30 days, the plaintiff shareholders Deputy litigation can for the company. That the Japanese law, America method, in general, the qualification of the plaintiff shareholders accords with the legal requirements, but it does not mean that it can be directly filed a lawsuit on behalf of. The company is a corporation, shareholders representing the company to exercise their right to appeal, the plaintiff shareholders must have the utmost respect of corporate personality. Therefore, shareholders Deputy litigation shall desire, in a certain period of time to the company's board of directors, the shareholders' meeting shall -- or supervision will present a written request, require the company to pursue the responsibility of the directors, the company has the opportunity to consider whether it is necessary to bring a lawsuit.

Pre procedure of shareholder representative litigation provisions of article 152nd of China 'company law' is: (a) the plaintiff shareholders must first request in writing to the board of supervisors or board of supervisors (limited liability company with no board of supervisors may bring a lawsuit to the people's court); if the violation of company rights and interests, to the board of directors or executive director (limited liability company does not have a board of directors) when the request. (two) the board of supervisors, the board of supervisors, the board of directors, executive directors received the written request to bring a lawsuit, or receipt does not bring an action within 30 days as of the day when the request, can bring the shareholder representative litigation. The exception is "in case of emergency, don't immediately filed a lawsuit will cause irreparable harm to the interests of the company," the shareholders can not be pre conditions, filed a lawsuit on behalf of direct.

Five, shareholder litigation on behalf of the accused

The interests of the company is the fundamental guarantee for shareholders and creditors realization, therefore, in violation of company property rights company organ shall timely exercise, right, back to company property rights loss by means of judicial relief. But in some cases, the company members of organs, such as controlling shareholders, board members, which is against the interests of the company act, or not the interests of the company act of tort and tort person, but people have all sorts of interests to a lawsuit, which must lead to lax, the right exercise. Shareholder representative litigation, that is when the company fails to pass a civil case member limited authority and the realization of other rights, with the legal status of the shareholders for the benefit of the company and according to the legal procedure on behalf of the company the right to litigate.

Shareholder litigation on behalf of the accused is misconduct against the interests of the company and the company is liable for the parties to deal with. A range of the accused, the law of every country is different. Provisions of legislation to American represented all against the interests of the company, whether the people inside the company or outside the company, the people, as long as the company has the right to bring forward the procedural claim of its people, can become the defendant; while in Japan and China's Taiwan region as the representative, the defendant is defined as a specific others, such as directors, supervisors and other. China's new "company law" article 152nd of the shareholder lawsuit on behalf of the proper defendant stated as "directors, supervisors and senior managers, and" others "". Although here on the company's internal staff only lists 3, but the controlling shareholder of the company, other shareholders, actual controllers and other should also be interpreted as belonging to the scope of the proper defendant, these people may be included in the "others". Therefore, the shareholder representative action in China proper defendant includes not only the company's internal staff, including any third people outside the company, that the company implemented the improper behavior and to bear civil liability company, in the company fails to exercise the right to appeal the case, can become a shareholder representative litigation the defendant. The provisions of this broad is conducive to give full play to the role of the shareholder representative litigation system.

Six, the scope of the shareholder representative litigation

 The scope of the defendant lawsuit behavior, there are two kinds of legislative style, one in Japan and China's Taiwan area as an example, consider the object represents the lawsuit is only limited to the responsibility of the directors. A America represented, and that the company itself has the right to sue the same range, where the controlling shareholders, directors, managers, employees and third people for all corporate misconduct implementation. The provisions of China's new "company law" article 152nd actionable behavior includes two kinds of situation: (a) directors, supervisors, provisions of senior management personnel in performing their duties in violation of laws, administrative regulations or the company's articles of association, and causes losses to the company, it shall bear the liability for compensation of the case; (two) other violations of the legitimate rights and interests the company, thereby causing losses to the company. Therefore, our country's legislation to define filed shareholder representative litigation behavior is quite broad, should be understood as all the damage to the interests of the company, such as the board of directors and other senior management personnel violate the duty of loyalty, duty behavior, controlling shareholder violates the duty of good faith behavior, the third infringement behavior. The domestic scholars on the shareholder representative action in China are as follows: (a) the scope of the company directors, supervisors, the members of the liquidation group, the sponsor, management personnel manager, and other companies in violation of the company shall be adequate care and duty of loyalty to the company's responsibility; (two) controlling shareholders or large shareholder violate its obligation of Fidelity companies should the company's responsibility; (three), third people due to default of the company's responsibility; (four) the administrative organ for administrative tort liability company negative; (five) the rights and interests of other legal enjoyed by the company according to the company law, securities law, civil and commercial law and administrative law.

Seven, the legal status of the company in the shareholder representative litigation

On the shareholder representative litigation system, although the law gives shareholders to safeguard the interests of the company's rights, but the company has the independent personality, rights and obligations of the subject is still firm, in the investigation of the facts of the case also cannot do without the company's cooperation, so the company to participate in the litigation is inevitable. Company to participate in the shareholder derivative litigation is of great significance in the following aspects: (a), can make the decision results directly on the Corporation, and to win the compensation when ownership clear. (two), to facilitate the company put forward new claim in litigation, better safeguard the interests of the company. (three), to facilitate the company litigation in the plaintiff shareholder withdrawal to separate, in order to prevent the plaintiff and the defendant director conspiracy end the lawsuit and damage the interests of the company. (four), and facilitate the court will claim the plaintiff shareholders and company proposed claim to be consolidated, thus avoiding repeated action against directors and others have the responsibility behavior.

In the company to the shareholder representative litigation cases, is of great significance to determine the legal status of the company, mainly due to the different legal status in the representative action in different treatment on the substantive rights and obligations, permissions are not same. In China's legal framework, on the legal status of company in the shareholder lawsuit, the defendant said, third people said, the plaintiff said such opinions. The accused is based mainly on the legislative practice of Anglo American countries, that company can be classified as nominal defendant; plaintiff said third people and is the main entity succeeding to its rights and obligations from the perspective of the company, the company that can be listed as the third party or the plaintiff. The defendant, and the plaintiff is interested opposition parties, and in the shareholder representative litigation, under normal circumstances, the company and shareholders as between the interests is consistent, but the company failed to exercise their litigation rights, the exercise of subrogation litigation rights. Therefore, the company was listed as the defendant and the defendant at the meaning of the name. If the company is listed as the plaintiff, the plaintiff claims with positive meaning does not match, it is inappropriate. At present, our judicial practice is different, but generally tend to be listed as third people. If a court "a number of opinions" on the trial of disputes litigation of shareholder representative rules: the people's court shareholder representative litigation cases, should be listed as third people. In addition, the author believes that, because of the company to participate in the proceedings and not an independent claim, it to participate in the litigation is only in order to prevent litigation arising from the adverse results, should be the third party without independent claim.

Several other procedural issues, the shareholder representative litigation in eight:

(a) jurisdiction:

   Shareholder representative litigation jurisdiction which court, is the first problem encountered the shareholder representative litigation. Shareholder litigation on behalf of the accused person is against the interests of the company, the company is the general internal. If in accordance with the general principles of civil procedure "the plaintiff to the defendant", would be against the interests of the company under the jurisdiction of the people's court at the domicile. But considering the company or other shareholders will participate in the lawsuit, in order to give these people to participate in the litigation convenience, but also conducive to the court to ascertain the facts, the company law provisions of shareholder representative litigation from the jurisdiction of the court in the locality of the company. At present there is no unified and clear, some views on the introduction of only some of the local court. If a court hearing in the case provides guidance: shareholders according to the company law the 152nd regulation about the shareholder's representative action, the defendant has his domicile or the company shall be under the jurisdiction of the people's court at the domicile.

(two) case

   The causes of civil cases reflect the nature of cases involving civil legal relationship, legal relationship is the court will issue contains summary. China had no provision about the shareholder's representative action by the parties, the case and the court appeared a lot of confusion. Fortunately, in April 1, 2008 started the implementation of the "Regulations" civil cause of action, made clear provisions of the shareholder representative litigation case. Shareholder representative litigation case should be determined for the future: the company's controlling shareholder, actual controller, director, supervisor, senior management personnel to damage the interests of the company compensation dispute.

(three) on the shareholder representative lawsuit expense guarantee

   Shareholder representative litigation cost guarantee, refers to the plaintiff shareholders Deputy litigation court has the right to request of the defendant and the plaintiff to have certain conditions to provide a certain amount of guarantee to the defendant, the plaintiff shareholders in order to losing, defendant can obtain compensation for legal costs in the amount of the guarantee provided by the plaintiff in the system. On behalf of the lawsuit expense guarantee is a kind of restriction mechanism of the shareholder representative litigation, in order to prevent the abuse of right of action on behalf of shareholders. If a court hearing in the case provides guidance to the board of directors of the company: shareholders, the board of supervisors or senior management personnel as the defendant filed shareholder representative litigation, director, supervisor or senior management personnel to provide evidence that the plaintiff may exist malicious litigation situation in a period, and apply for the plaintiff to provide security for costs, the people's court shall permit the guarantee fees, should be equivalent to the defendant in the litigation possible reasonable litigation expenses.

   Conclusion: the famous economist Hernando said in "the mystery of capital" in one book: the lack of developing countries is not money, but that money into the capital system. Safety is closely related to the shareholder representative litigation system and capital, is an important part of the system.

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