A Study on the Protection of Rights of Parent's Shareholders in Parent-Subsidiary Context

• Main Authors: HAN CHING-I, 韓靜宜
• Other Authors: HUNG HSIU-FEN
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/41395079180560410986

碩士 === 東吳大學 === 法律學系 === 102 === For the forming of the affiliated enterprises in Taiwan, we establish specific chapter (Chapter VII, from Article 369-1 to Article 369-12) to regulate affiliated enterprises related affairs in Company Act. Parent company has the leading role in the affiliated enterprises, and decides the interest distribution in the whole affiliated enterprises. Parent company may sacrifice its benefits to let the subsidiary gains for the benefits of the affiliated enterprises as a whole. However, the current Taiwan Company Act only covers the protection for the minority shareholder and creditor of subsidiary, while still lacks of the protection for parent’s shareholders. This paper will be divided into three parts to discuss the protections of rights of parent’s shareholders: first, is the right to acquire information; second, is the right to operate, supervise and participate in the parent company; third, is the right to take legal actions against the responsible ones which is the double suits to discuss the protection of rights of parent’s shareholders. The right to acquire information includes the right to inspect the company’s records, and the court can appoint inspectors to look into the company’s records. For the former, we will discuss whether the legal entity of subsidiary can be ignored and extended parent shareholders’ inspection right to subsidiary’s records. By doing so, we can protect shareholders interest of parent company. But the problem is, in which situations can we ignore the legal entity of subsidiary? And what is the legitimacy? While when the inspectors were assigned by the court due to shareholders’ petition, we hold the opinion that the investigation ranges of inspectors from parent company can extend to subsidiary. As for how to ensure the right to participate, operate and supervise in the company, we can enhance the corporate supervise mechanism by supervisor and pass-through voting. Parent’s shareholders can express their idea to subsidiary, and wrongdoings in subsidiary can be stopped by injunction right of parent’s shareholders. As for how to enhance the corporate supervise mechanism by supervisor, in this paper, the discussions will be divided into two part, the first part will focus on enhancing the independence of supervisor. The second part, we will move on to see whether the supervisory powers of parent company reaching the subsidiary can help complete the supervise mechanism of affiliated enterprises. In this paper, we believe that the affiliated enterprises supervise mechanism in Taiwan could be enhanced by doing so. Then we will discuss the pass-through voting could strengthen the rights of parent’s shareholders, and give them the right to participate the operation in subsidiary. In other words, parent’s shareholders could express their ideas to subsidiary by pass-through voting. We will focus mainly on Article 185 of Company Act to discuss the pass through voting to understand this issue, hopefully by this mechanism to solve other issues, for examples, in merger, modification or alteration of the incorporation articles, electing directors and dissolution…etc. In the end, we will discuss the injunction right on directors’ wrongdoing. The injunction right on directors’ wrongdoing can avoid the loss to expand in the company. But the prerequisite is that the shareholders must have the right to acquire the information or it is nearly impossible for the shareholders to be aware of the wrongdoing done by the directors. As for shareholders’ right to take legal actions against the responsible ones, the double suit comes from the derivative suit. The double suit is one of the methods that parent’s shareholders can supervise subsidiary directly. The shareholders right of derivative suit of the parent company cannot take real effect due to the form of the affiliated enterprises. Thus, in this paper, we are going to see whether it is possible to grant the parent’s shareholders the right to bring the double suits against subsidiary to solve the problem.