Rationale and Framework Design for the Exercise of Parent Company Shareholders’ Pass-through Rights


  • Miao Wang Chongqing University Law School


shareholders’ rights pass-through system, shareholder book inspection rights, legal applicability requirements


The "shareholders’ rights pass-through" in the context of a parent-subsidiary corporate framework refers to allowing shareholders of the parent company to bypass the legal entity barriers between the parent and subsidiary companies, thereby exercising the right to inspect the subsidiary’s books. This system is also known as the "parent company shareholders’ book inspection regime". In the face of global economic integration, the trend toward corporate group structures is inevitable. Traditional corporate law, centered around individual corporations, is ill-equipped to address the complexities of corporate groups. As a result, insiders of a corporation might exploit the parent-subsidiary structure to unjustly deprive parent company shareholders of their rightful information access, thereby illicitly consuming corporate assets. This paper examines the theories and practices of corporate law in the United States, Japan, and other countries, aiming to explore the potential adoption of the shareholders’ rights pass-through system in China. We argue that in designing this system and the exercise of such rights in China, several issues should be considered: under what parent-subsidiary company structures should parent company shareholders be allowed to inspect subsidiary books; what grounds might subsidiaries have to deny such pass-through information rights; whether court permission is a prerequisite; and whether there should be specific shareholding requirements for the parent company’s shareholders.


Berkey v. third ave. ry. co. [155 N.E. 58]. (1926).

Companies act (part i, part ii, part iii and part iv). (2005). https://wipolex-res.wipo.int/edocs/lexdocs/laws/en/jp/jp187en.pdf

Danziger v. luse [815 N. E. 2d 665]. (2004).

Danziger v. luse [815 N.E.2d 658]. (2005). https://casetext.com/case/danziger-v-luse/

Del. code ann. tit. [8§220]. (2003).

Fletcher, W. M. e. a. (1999). Fletcher cyclopedia of the law of private corporations.

Henry G, H., & John R, A. (1983). The law of corporations. West Publishing Co.

Jiang, D. (2005). Beyond the judicial dilemma of shareholders’ right to know litigation. Jurisprudence.

Matthew A, K. (2006). The right of a parent’s shareholders to inspect the books and records of subsidiaries: None of their business? 74 U.CIN.L.

Noel saito v. mckesson hboc,inc. [806 A.2d 113]. (2001a).

Noel saito v. mckesson hboc,inc. [806 A.2d 113]. (2001b).

Organizing association of law: Opinions on the revision of the company law – centered on the parent company law.(n.d.). http://www.keieihoyukai.jp/opinion/opinion63.pdf.

Pang, M. (2007). Shareholders’ right to know: From balance of interests to application of law. Application of law, 8.

Rev. code ann [§1103.16(C)]. (2005).

Xu, L., & Wu, J. (2005). Whether the original shareholder can exercise the right to know. Board of directors, (2), 2.

Xu, W. (2010). Delaware general corporations law. China Legal Publishing House.

Ye, L. (1997). Chinese company law. China Audit Press.




How to Cite

Wang, M. (2024). Rationale and Framework Design for the Exercise of Parent Company Shareholders’ Pass-through Rights. Advanced Perspectives on Social Sciences and Humanities, 1(2), 12–16. Retrieved from http://hkasdp.com/index.php/APSSH/article/view/8