Shareholders The Right To Contract Explained

From the perspective of economics and law, the contracting nature of company not only enrich and develop the traditional theory of contracting connotation, but also provide the theoretical analysis tool for legal study. On the hypothetic theory of trade model, the paper tent to study the nature and content of shareholder's right and the right of transference and voting from the angle of the contracting theory, so as to explore the economic meaning of the corresponding rules concerning the nature, the content, the collocation and exertion of shareholder's rights, to enrich the basic theory study of right thereof, to review the traditional theory and to perfect the relevant system to a considerable extent.The first part observes the basic theory hereof. The paper focuses on the history of contracting theory which developed from the agency theory, the theory of transaction costs to the under-developed contracting theory, and estimate the contracting theory which enrich the basic connotation of contract and provide a sort of theoretical tool and perspective as well.The theory thereof advances the fact that company is a "nexus of contracts", the company law should be a set of rules which empower partners to make contracts by their will. Moreover, the contracting theory should advocate the point of view of making contract by will.By the channel of the contracting theory, the part tends to make elementary explanation for the basic contracting relationships between shareholder and other people correlative. By the essential analysis of trade model with the hypothetic theory of rational economic person who pursues maximized benefit, the paper details on the beneficial conflicts between shareholder and governance, major shareholder and minor shareholder, shareholders and creditors etc., which would be the essential nature of contracting relationships of shareholders and the theoretic basis for contracting explanation of shareholding right.The second part focuses on the nature of shareholding right explained by theory thereof. From the history of its coming into being, the paper put forward to the viewpoint that the shareholding right comes from the transference of share capital and the contracting behavior, that is, the contracting mechanism of bargaining. Moreover, the paper tries to analyze how the company constitution defines, standardizes and limits the right hereof form the perspective of efficiency advocates, and tends to explain the nature of right by the agency theory, the theory of transaction costs and the under-developed contracting theory. Therefore, the paper advances the views that the contracting nature lies on the efficiency requirement of remaining right and controlling right, the economic nature lies on the aim of maximizing benefits. Furthermore, emphasizing the contracting nature especially would contribute to advocate contract-making by will, and construct the feasible governance mode oriented by shareholders' benefit.The third part focuses on the contracting nature of right collocation, and the relationship between company constitution and company law so as to argue the basic structure of right. The paper brings forward to the argument that the content of shareholding right contributes to right collocation which owns the contracting contribute to some extent, and the collocations of company constitution and company law are mutually complementary for right collocation thereof actually. Therefore, the compelling rules would not be applicable for the company constitution. Moreover, the basic frame of right collocation comprises the right for benefit, the right for governance, the right for information, and the right for sue.The forth part talks on the transference right from the angle of contracting explanation. On the basis of theoretical element, the paper tries to argue that the transference right is a channel for shareholder to retreat from the company. Furthermore, the degree of transference limit depends on the economic configuration of companies. That is, open company should hold on the principle of transference without limit, and closed company would defer to shareholder's will. So new company law should focuses on non-compelling rules concerning transference in order to provide more choice for shareholders of closed company.The fifth part observes that the right for vote is entitled to the shareholder is the bargain for the biggest self- benefit among the company joiners, as a aspect of the contract and while a aspect of the system for venture bared.The explanation to the principle of the capital majority vote approves that the opinion from the capital majority is to be the best choice. The basic economic logic of the collectivity function bases on three aspects: a contract system of the shareholder bargain, reduction of the no information- symmetry and the agency cost. Therefore, those principles should be the default rules for the company law, and they shall be set as the randomic rules for the close company while the compellent rules for the public company.The sixth part observes that the sprite of the contract freedom in the new company law of P.R.C includes the freedom for the shareholder setting up the company, governing the company, transacting, distributing the profit, retiring the company and the relieving rights. In China , the rights system of shareholder lies in the questions hereinafter such as prescribing the issues on the contract freedom of the shareholder as the compellent rules which account for large percents, without the rule of transference, the defaults of the rule of the voting. Therefore, the paper approves that compellent rules and randomic rules be differentiated rationally, compellent rules be reduced ulteriorly, and the transference right and voting rights should be completed to a considerable extent.Moreover, the part put forward to the outlook of the shareholding rights. To keep high flexibility and set up dynamic application mechanism, company law should face to the globe competition and the test from the technology and market actively. Furthermore, to improve the creative ability, hold on the shareholder-orient, develop the contracting principle by will and establish the effective reform mechanism for company law would be excellent measures.The theoretical innovations in the paper are sorts of issues as follows:First of all, by the channel of contracting elucidation in the economics, the paper tends to exercise a sort of novel research means to analyze the shareholding right exactly. That is, studying the economic meaning of relevant rules for the right herein aims to enrich basic theory concerning the shareholding right in company law.Then, the paper details on shareholding rights which is a set of contracting rights with developing, open and dynamic properties actually. The logistic sense of its coming into being lies in the transference of share, the management of ownership, and the contracting mechanism. Therefore, the economic meaning is to reduce trade cost and agency cost in a great degree.Thirdly, as for company governance, the paper advocates that the shareholder-oriental mode be followed actually because the core of company governance lies in shareholders' autonomy and the contracting by will would contribute to shareholders' autonomy.Fourthly, the requirement of contracting attribute enlarges the collocation of right. As for China, company law should differentiate the compellent and randomic rules clearly, and make appropriate arrangement between them.Finally, the paper puts forward that establishing a sort of dynamic application mechanism in company law needs the law hereof response to global competition and the test from the technology and market actively, so as to improve the innovative capability, to insist on shareholder-orient, to develop the contracting principle by will and to establish the effective reform mechanism for company law.