Private Benefits of Control in the Control Transaction and the Remedy for Minority Shareholders

• Main Authors: Fang-Ju Chou, 周芳如
• Other Authors: 邵慶平
• Format: Others
• Language: en_US
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/e77ah5

碩士 === 國立臺灣大學 === 法律學研究所 === 105 === In today''s business environment, mergers and acquisitions (M&A) are great strategies for enterprises to enhance their competitiveness and seek new profitable opportunities. In many control transactions in Taiwan, the controlling shareholders could abuse its dominant position in corporate deals and gain private benefits of control from therein. In fact, we could divide “private benefits of control” into two parts: freezing out the minority shareholders and acquiring control premiums by selling a block of shares. Under such circumstances, the minority shareholders may become oppressed or unfairly prejudiced by majority shareholders. To be exact, the majorities may force minorities to involuntarily sell their shares at low price or improperly gain control premiums, which may undermine minorities’ opportunities to earn such premiums. In the above situation, this paper will discuss the possible solutions to the problem and put emphasis on the importance of ex post facto relief. The ex post facto relief may include “fiduciary duty” and “appraisal right”. Nevertheless, in Taiwan while there is usually severe conflict of interest in the control transactions, controlling shareholders do not have fiduciary duty. Therefore, this paper argues that it is necessary to introduce fiduciary duty on controlling shareholders into Taiwan’s legal regime. Furthermore, the courts’ reasoning in determining the fair price under appraisal right is not very clear, which leads to the result that the appraisal right cannot necessarily play its role in protecting minority shareholders. Due to the long history in developing these two ex post facto reliefs under U.S. law, this paper will discuss the concept of fiduciary duty of controlling shareholders and appraisal statutes respectively in the U.S. Then this paper will proceed to propose the possible revisions under Taiwan’s legal regime.