PhD ceremony Ms. C. Fan: Bringing controlling shareholders to court. Standard-based strategies & controlling shareholder opportunism

PhD ceremony: Ms. C. Fan, 9.00 uur, Academiegebouw, Broerstraat 5, Groningen

Dissertation: Bringing controlling shareholders to court. Standard-based strategies & controlling shareholder opportunism

Promotor(s): prof. J.B. Wezeman, prof. O. Couwenberg

Faculty: Law

Controlling shareholders have largely unbalanced power in the governance structure of corporations, which leaves the minority shareholders vulnerable of being exploited. One way to deal with the problem is to allow minority shareholders to sue a controlling shareholders when they think they have been treated unfairly by the said controlling shareholder, and the challenged conduct will be reviewed by court under certain standard pre-set by law. Law and economist call this kind of solution a standard-based strategy. Chunyan Fan did research on how to use these standard-based strategies most efficiently when dealing with conflicts between controlling shareholders and minority shareholders.

Fan identifies three sub-issues that need to be addressed properly by law makers for a standard-based strategy to function in an efficient way: what is the substantive standard of controlling shareholder conduct; how should the standard be enforced by court; and how to choose between standard-based strategies and other regulatory strategies. She tries to answer these three questions through studies of three individual jurisdictions: the US, the UK and China.

Fan conducts an extensive study of American case law, which is the most sophisticated standard-based strategy around the world, and uses the UK as a comparison to show a different approach of using standard-based strategies in the regulatory system. As for China, besides an analysis of standard-based strategies used in the current law, the main purpose is to draw lessons from the first two more advanced jurisdictions and provide suggestions for future improvement.