Distinctive Features of Controlling Shareholders’ Liability to the Company and Other Shareholders under Chinese Corporate Law

Within the framework of the study examining the mechanisms for holding controlling shareholders liable for damage caused to the corporation and its other shareholders, the author arrives at the following conclusions: (1) Chinese legislation and corporate law doctrine departure from the categories of a “minority” and “majority” shareholder that are being replaced by the concepts of “controlling” and “non-controlling” shareholder; (2) The principal grounds for imposing liability on controlling shareholders towards the corporation and/or other participants are as follows: the abuse of rights, violation of law, the corporation’s charter, or administrative regulations for the purpose of causing harm to the corporation and/or other shareholders; the use of affiliated relationships with other entities to the detriment of the corporation; giving instructions to executives and directors with the intent of inducing them to take actions harmful to the corporation’s interests; (3) Chinese corporate law provides for the possibility for non-controlling shareholders to bring direct claims against controlling shareholders.