Shareholder Inspection Rights in China: An Empirical Inquiry

Drawing upon overseas experiences, notably the U.S., China introduced the legal regime for shareholder inspection rights in its first national company law and over the years, has gradually developed more detailed rules and made amendments intended to better suit the local conditions. Apart from written law, this paper also conducts an empirical study of how the law has been applied in practice, by examining relevant cases adjudicated from 2012 to 2017. The empirical findings show that China’s shareholder inspection rights have some distinctive features, and there are similarities and differences between China and the U.S. (as represented by Delaware). Despite the different types of agency problems in corporate governance between China and the U.S., shareholder inspection rights are similarly useful in mitigating informational asymmetry and facilitating shareholder engagement.

Some of the differences, such as those on the number and types of subsequent litigation, can be explained by the different patterns of corporate governance strategies as well as different corporate litigation regimes between the two jurisdictions. This paper also reveals that there are some significant differences in the key elements of the legal framework for shareholder inspection rights between the two jurisdictions and based on this, sets out improvement suggestions for China.