On Corporate Social Governance

Corporation is one of the greatest systematical creatures of human being, which optimizes the resources allocation, emancipates productivity, produces amounts of wealth, increases the public welfare and pushes the history of mankind forward. The conducts that Corporations occupy, control and exploit resources are actually styles of the corporations exerting powers that are otherwise political powers on individuals, groups even wholl society. The powers must be scientically separated and monitored in order to assurance efficient operation and preventing the abuse of powers. The system of which the powers of corporations are separated and monitored is corporate governance. Corporation is considered the one of ways of using individual property according to the traditionally theory of corporation governance, therefore, the goal of corporate governance is deemed to realize the maximization of individual property value, that is the maximization of the corporate profit or value. However, the corporation is the social existence and among the complex social nexus and has capacity for civil right and civil conduct. Corporation is independent of the individual who invests in it among the vast majority of legal relations. Corporation constitutes contractual and noncontractual with it’s stakeholders including its investors and influences their interests through exerting its capacity for civil right and civil conduct. The public is important stakeholders of corporation and has all kinds of contractual and noncontractual legal relations with corporation. Corporation influences the public not only positively but also negatively. However, the traditional corporate governance system has not correctly responded to the effects, especially the negative ones. The practices of corporate governance has testified that the public law that is madatory regulation of "command-control" is not enough protect the rights and interests of the public and it is necessary seclection to employ the private law’s method which make the public participate in the decision-making process of corporation. Corporate governance by the public (CGP) is the new system that is based on the rethink of the present corporate governance mechanism. The objective of CGP is to establish scientifical and reasonable system so as to make the public take part in power separation and monitoring of corporation and balance the relationship of present and future, materials and spirit between corporation and the public.In the dissertation, there are six chapters except the introduction and conclusion. The primary contents of the six chapters are summarized as below.The first chapter is on the concept, theory and historical process of corperate governance. The chapter analyses the same and difference and their causes of corperate governance model of USA, Germany and Japan on the basis of introducing the theory and practice of these countries’corporate governance. Moreover, the chapter focuses on the relation of internal and external corporate governance and gets a important conclusion, and explains the conclusion with the "double balloons theory" that is created by the author. The conclusion is that the effect of internal corporate governance is inversely proportional to external ones, in other words, if the external corporate governance is particually effective so as the outside market competition is sufficient, the internal ones may be simplified; on the contrary, if there is lack of competition outside corporation, the pefect corporate governance system must be established inside the corporation. When the shares are not dispersed and shareholders can not establish effective mechanism of check and balance inside corporation, the strength of outside must be introduced to inside of corporation in order to constitute pefect inside corporate governance structure. The chapter points out the present plight and crisis, announced and analyses the sprout of corporate governance, expounds and proves the urgency of practicing CGP.The second chapter is on the efficient causes of establishing CGP in theory and practice and analysizes its necessity and feasibility. The chapter analyses the rationality, necessity and feasibility of CGP from the points of materialist conception of history, of the relation human being and nature, human being and society in philosophy, of the state’s doctrine, social&economic rights and power allocation in political science, of social cost theory, stakeholders theory and public finance theory in economics, of the purposes and functions of rules to jurisprudence, constitutionalism and business law. The chapter also introduces and analysizes the theory and practices of governance of large state owned enterprises in former Soviet Union, plan-economy-era-China and the western developed countries. The chapter points out the sames and the differences of these state owned enterprises’governance and focuses on the differentiations and relations between CGP and the management which the goverments of Soviet Union, plan-economy-era-China operated the state own enterprises in name of representing people’s interests.The CGP embodys civil legal relation of private law in corporate governance in civil society and it is a part of society’s self-regulation, in contrast, the management which the goverments of Soviet Union, plan-economy-era-China operated the state own enterprises represents a legal relation of public law that governmental power allocates resources and this is legal relation of administrative law or economic law.The third chapter studies the fundamental problems of CGP and it is the key point of the dissertation. The chapter defines the legal concept of the CGP on the basis of sorting out relative literatures and analysizing comparatively "social governance","corporate community governance and stakeholder governance. The chapter analysizes the values and believes the values of CGP according with the ones of business law. Corporation as a legal person and a member of society should bear the social accountability. The chapter also demonstrates the functions of CGP from four aspects which are remedy to breach of law, protecting the rights, upholding the justice and realizing the social harmony. There are two categories which are direct (internal) governance and indirect (external) governace in CGP from spatial distribution. The direct governance is the one which the pulic or their deputies take part in the decision-making process inside corporate. The direct governance includes social director governance, supervisor governance, member of CGP committee governance etc. The indirect governance is the one which the public or their deputies realizes their claims of rights and interests through bringing pressures to the corporation from outside. The indirect governance includes policy governance, legal governance, media governance, NGOs governance, and market competition givernace etc. The direct and indirect governance are not static and they may transform each other under certain conditions.The fourth chapter is on the conditions application to CGP. The indirect CGP is an objective existence in the modern society and affects almost every corporation. The direct CGP is not applied generally to every corporationp; in a certain sense, it is a relief measure because of the lack of competition outside Monopoly Corporations. The conditions application to direct CGP are the lack of competition outside corporation and the corporation have a great impact on the public’s rights and interests. In this type of corporation, if not to improve the direct CGP inside it, the corporate governance system which is balance, efficient, stable will be destroyed and may damaged the public’s rights and interests, the monopoly corporation is the case. The corporations that need direct CGP are confined to must-be-existence-corporations that improve the welfare of society entirty and realize the social justice. In China, the corporations that need direct CGP are state owned monopoly enterprises. The problems that other corporations except monopoly damage the public’s rights and interest will be solved through the competition mechanism outside corporation.The fifth chapter is on the CGP of China’s state owned monopoly enterprises. The chapter studies the reform history of China’s state owned enterprises and analysizes the present situation of corporate governance about the China’s state owned enterprises. The attribution, correct orientation of state owned enterprise and its reform aim are made clear. This chapter also argues the rationality, necessity, feasibility and conditions for application of direct CGP of state owned enterprises. This chapter constitutes the theory and mechanism of CGP of state owned monopoly enterprises and studies its construction of legal systems on the basis of this theory and mechanism from standpoints of the subject, direct and indirect governance and supervision.The sixth chapter is on prospectives of the CGP. The chapter previews the law of the development of CGP and demonstrates the necessity and probability from standpoints of corporate power extending and the arousal of economic right consciousness of all nations, the chapter also demonstrates the international convergence of CGP.To sum up, nowadays this problem is no longer a "To Do", but a "what to do" and "how to do it" in the field of CGP. The CGP is the operation mechanism that monopoly corporation balance itself and social interests. Regardless of the name of so-called the CGP, the essence of CGP is the same and the essence is correcting the wrong single the aim of corporate governance, meanwhile, direct CGP is important governance way which it eradicates the abuses of monopoly corporations that must be preserved and maintained.