Derivative actions as a mechanism for the protection of minority shareholders in China: a result of convergence or divergence

Fu, Jian 2006, Derivative actions as a mechanism for the protection of minority shareholders in China: a result of convergence or divergence, in Australasian Law Teachers Association-ALTA Annual Conference, ALTA Secretariat, Lindfield, N.S.W., pp. 3-22.

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Title Derivative actions as a mechanism for the protection of minority shareholders in China: a result of convergence or divergence
Author(s) Fu, Jian
Conference name Australasian Law Teachers' Association. Conference (61st : 2006 : Melbourne, Victoria)
Conference location Melbourne, Victoria
Conference dates 4- 7 July 2006
Title of proceedings Australasian Law Teachers Association-ALTA Annual Conference
Editor(s) Adams, Michael
Barker, David
McGolrick, Samantha
Publication date 2006
Conference series Australasian Law Teachers Association Conference
Start page 3
End page 22
Publisher ALTA Secretariat
Place of publication Lindfield, N.S.W.
Summary The protection of minority shareholders has become one of the key features of company law reform in many countries in recent years. Various mechanisms have been created to achieve this objective. Australia has introduced the statutory derivative action procedure mainly based on models drawn from Canada and New Zealand; this provision was inserted into the Corporations Act in March 2000. China has also adopted a similar mechanism – known as the shareholder representative action; this scheme was based upon China’s understanding of statutory derivative actions in Western countries. China’s derivative action mechanism is reflected in amendments to the 2005 PRC Company Law and 2005 Securities Law that both were passed on 27 October 2005 and came into effective on 1 January 2006. The development of statutory derivative actions in different countries demonstrates the interaction between forces of convergence and divergence in company law reforms. This article reviews different mechanisms adopted in the Chinese law for the protection of minority shareholders. It especially focuses on an analysis of the nature of the shareholder representative action and the procedures for its utilisation in China – the equivalent to Western countries’ derivative actions. In comparison with statutory derivative actions in Australia, this article argues that the concept of the shareholder representative action in China rests upon a misunderstanding of Western derivative actions; this has involved a compromise between the dire need to protect shareholders and the ambiguities of a weak court system. As a consequence, China’s reforms in this area are largely a tentative gesture and are therefore unlikely to be very effective.
Language eng
Field of Research 180106 Comparative Law
HERDC Research category E1 Full written paper - refereed
Copyright notice ©2006 ALTA Secretariat
Persistent URL http://hdl.handle.net/10536/DRO/DU:30006211

Document type: Conference Paper
Collection: School of Law
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