Abstract: In the parent-subsidiary company, it is difficult for parent company’s shareholders to safeguard their legitimate rights and interests when the subsidiary company commits an illegal act and both the parent company and the subsidiary company are inactive in filing a lawsuit. Article 188 of The Company Law of the People’s Republic of China (Revised Draft) (Second Draft) stipulates that the shareholders of the parent company in the wholly-owned relationship are allowed to pursue the liability for illegal acts of the directors, supervisors, senior managers, and etc. of the subsidiary company to realize damage relief. However, the provisions are too general and narrow. The Company Law also needs to make clear and specific provisions on the judgment standard of the parent company and the subsidiary company, the qualification of shareholders of the parent company, the scope of defendants, the setting of the pre-procedure, the prevention of litigation abuse and the reform of litigation costs in the dual representative litigation system.

Key words:  parent-subsidiary company, dual representative litigation, shareholders’ rights, directors’ liability