China's Supreme People's Court Sunday issued a judicial interpretation of company law, requiring increased efforts to protect shareholders' rights.

The interpretation stipulated that controlling shareholders shall not be exempt from the liability for compensation in related-party transactions even if the transactions are undergoing legal procedures, in a bid to protect the rights and interests of small- and medium-sized investors.

If a contract for a related-party transaction is invalid or revocable, eligible shareholders can request that the contract be confirmed as invalid or revoked, according to the interpretation.

The interpretation also addresses issues including discharge of directors and compensation, the time limit for distributing corporate profits and major dispute resolution mechanisms for limited liability companies.

The interpretation will come into force on April 29. 

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