Legal Research on mutual investment of corporations

• Main Authors: Hung Chih-Ching, 洪志青
• Other Authors: Peter Wang
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/49223938320089968499

碩士 === 國立臺灣大學 === 法律學研究所 === 89 === The motives of corporations to conduct mutual investment stem from ensuring the control power on enterprises, maintaining cooperation between companies, stabilizing or rising the stock price, or helping companies to gain capital. However, mutual investment may bring positive effects on corporations as well as negative effects. The potential crises of corporations to conduct mutual investment are the followings: First, it will result in capital deduction or inflation, which is against the principle of "capital substantiality" or "capital unchangeableness" of company law. Second, from a view of the operative control of enterprise, it tends to provide a tool for the responsible persons in a company to consolidate their control on a company permanently. Namely, the parent may "control" the subsidiary. As a result, the board of the parent can cause the subsidiary to vote its shares in the parent in any manner the board desires, including the re-election of the directions of the parent. It is unfair to the other shareholders of the parent or its subsidiary. Third, the management may abuse mutual investment intending to influence or inflate the share price on the centralized securities exchange market. According to the financial crisis of companies in recent years, it is proved that the financial crisis has something to do with the mutual investment between corporations. This dissertation undertakes to examine the practice and complicated legal issues of mutual investment between corporations, to put an emphasis on the protection of other shareholders, and the creditor as well. In addition, it also introduces foreign regulations to restrict mutual investment as well as the theories thereof. And finally, it undertakes to review the present regulations, especially company law, and try to suggest the reversion or amendments to the regarding regulations.