A Study On Corporate Control Rights In Legal Regulations

The regulation problems of corporate control rights cover abundant contents, thethesis starts with the abuse of corporate control rights, targeting at legal regulationsand putting forward legal regulation measures in terms of abuse in controllingshareholder, especially on the problems of minority shareholders’ employ, relatedparty transaction, assignment of control power, change of voting power, rejectingdistribution of surplus, rejecting petition in bankruptcy as well as dismiss of resourceand the behavior damaging minority shareholders’ benefit by horizontal competitionand violated invasion through analysis of legal principle, demonstration andcomparative analysis.With the advent of economic globalization and increasing expansion ofmanagement by grouping of enterprises within companies in our country especiallylisted company, controlling shareholder occupying dominant position often takes theadvantage of control power unscrupulously and squeezes vulnerable shareholder eventhe benefit of social public, which influences normal production and management ofcompanies, breaks the harmony and stability of market economic order, and evenrestrains integral development of market economy of our country. In order to face thisstern situation, we must make necessary regulation on corporate control rights fromlegal angle so that we can suppress its spread as soon as possible. But during theideation of concrete regulation, theoretical researching target in our country isrelatively weak or absent; facing unbalancing benefit under most decisions up tocapital, it’s difficult to reply efficiently in practice. Current legal regulations are at thestate of attending to one thing and losing another, biased or afterthought,hypercorrection or getting lost when facing basic factors of regulated targets.Therefore this thesis tries to comb the original and regulation angles of corporate control rights and reply the series of problems on how to establish a balanced legalregulations system by carefully carding relative concepts, combining with theinvestigation of corporate control rights of America and China during financial crisis,and weighting fighting examples of corporate control rights of our country.This thesis follows abuse of corporate control rights in legal regulations, thelogical cue, to put forward considering angle and reasonability of protectionstockholder’s right in the legal principle analysis of corporate control rights, so as toexplore the way of establishing the legal system of abuse in corporate control rights.Besides introduction and conclusion, the thesis is divided into5parts.Part1is about the basic problems of abuse in corporate control rights. Thischapter discusses the relative concept of corporate control rights first, and illustratescorporate control rights from the angle of economics and finance and banking; theauthor thinks the generation of problems in corporate control rights has objectivecomplexity, and the development of the influence economics field has on it needs tobe explained by “complexity” inevitably, what’s more, this part figures out the innerlaw by studying the main content of corporate control rights in economics field. Infact, because of endless concrete abuse of corporate control rights influences doers’motivation, purpose, identity and consequence and because inner control andcomplexity are different, we need to comb our theory at a higher level. The abusingregulation angles, target and functions of corporate control rights can be summarizedby exploring legal theory of modern corporate control rights.Part2is the investigation of corporate control rights under complexity. Thisthesis analyzes the configuration of western countries’ corporate control rights, combsthe evolution of control power’s allocation and summarizes its own mode and features.To make clear that abuse behavior of control power is a way of controllingshareholder using corporate control rights, and a behavior damaging the benefit ofminority shareholder. This thesis chooses American corporate control rights as studytarget, by reviewing dispersed stock rights leading to the weakening of operatingdecision of corporate under financial crisis to fully illustrate that “managerial revolution” can completely bottom up the relationship between the owner andcontroller; however, this trend will become even more violent with the increasinglyenhancing of professional levels of professional manager. The perversion of therelationship between board of directors and managers causes the loss of supervisingfunction of the board of directors, combining with information superiority grasped byprofessional managers, which makes managers screen the information they need firstaccording to their own needs, and fundamentally this will influence the efficientrestrict on professional managers of the board of directors. The article analyzes andconcludes American corporate board of shareholders, board of directors, chiefexecutive officer and external audit systems, summarizing the reasons formingnegative attitudes of American shareholders on corporate authority to supervise; byanalyzing problems exposed in American corporate under financial crisis, the thesisalso illustrates reestablishing corporate governance principles under financial crisis.Part3is the analysis of our country’s current situation of corporate control rights.As a connecting link between the preceding and the following, this chapter will shiftthe angle of view to the configuration of our country’s corporate control rights. First itreviews the configuration features of control power of enterprises of the structure ofeconomic sector under ownership by the whole people. After the establishment ofmodern enterprise system, in order to adapt to the competition of socialist marketeconomy, evolution around enterprise’s surplus control power and the pursuit ofsurplus value, control power experienced everything transforming enterprises shouldexperience. The mainstay functions of superior shareholders in large companies arerecognized by experiencing financial crisis, the final owners of these wealth have farmore professional spirit and moral sentiments than those managers who are eager tomake fortune, by analyzing huggery cases of stock rights in “Yun Da Science andTechnology” and “GOME” to refine the common problems existing in corporatecontrol rights in our country currently, aiming at clarifying the problems such as beingabsent in supervision, drawback in board of directors, weakening of board ofsupervisors and insider control, so as to lay a firm foundation for later legal regulations.Part4is about the root and regulation angle of view of abuse in corporate controlrights. As an important chapter, under the analysis of the former three chapters, thischapter tries to begin from the root of the problems of “two separate rights” and“conflict of interest of shareholders” to analyze the current situation of abuse incorporate control rights in our country. Benefit of shareholders and conflict amongthem are two mutually contradictory factors causing abuse of corporate control rights;as for this theory, circle and practical field acquire the agreement that except obviousdifference, we should carefully analyze and formulate adaptive legal solutions duringthe process of pursuing solutions. Because of the history of our country’s plannedeconomy, among listed companies, especially conversion companies from belongingto the state state-owned shares take up considerable portion of shares, what’s more,these stock rights are in long-term dormancy; additionally, highly centralize andadministrative entrust mode of operation leads to many historic left-over drawbacks inthese companies. Thereafter the chapter concludes limited functions embodied incontrolling abuse of control power, protecting inferior dormant-partner’s benefit fromthe angle of view of capital system and agent cost, combining corporate currentmanaging strategies; how to defeat these historic reasons and intrinsic unreasonableproblems in ownership structure will directly influence the effect of corporate dealingwith and regulating abuse of right.Part5is about the establishment of legal system of abuse in corporate controlrights. The generation and development of human society originate from a motivepower spring—spirit of creativity. Everyone shows the centre of their imagination andcreativity—cost of competition on the stage of history without exception from country,nation to companies. How does this chapter establish legal regulation system of abusein corporate control rights will be explain as a centre under the major premise that ruleof law hasn’t destroyed balance of law. As for this problem, just as what somescholars comment “following logic is an empirical thinking way and their tasks are tocorrect rather than to establish some new reasonable order, so common behavior rules are enough other than deciding behavior of disputing party”. The abuse in corporatecontrol rights is substantially a behavior that exceeds independent personality andlimited responsibility of the company and violates relative legal benefit of minorityshareholder of the company and creditors, therefore when following experiences, it’smore likely to expand our minds to pursue new solutions. This thesis confirms thenecessity of establishing a legal regulation system for abuse in corporate control rights,combining with theory mentioned in former chapters, analyzing the problem ofperfecting and balancing denying system for company personality and following thisidea, this thesis uses the enforcing rule in relieve of procedural law as the balancingpoint to establish regulations in abuse of corporate control rights under theestablishment of procedural law. Finally it is thought that stockholder derivativepolicy should be improved as a currently practical systematic resource compared withthe whole allocation of legal system in our country’s company legal system.