On The Protection Of Shareholders Dividends Right

Right to dividends, as a shareholder’s property rights, can be achieved only ifthere is a surplus of profits in a company, but also depends on the company’s intention.Shareholders should respect business judgment of directors or executive becauseDividend distribution belongs to autonomous areas of the company. But that can notbe ignored, controlling shareholder can apply improper control in order not to paydividends or pay less dividends, and hollowed company profits by the transfer ofbenefits. Law gives share repurchase claims to dissent shareholders and so on.Although this improper behavior are responded by transfer of shares, the loss ofproperty interests of investors are often difficult to restore. This will undoubtedlyaffect the confidence of investors, and influence the healthy development of thecapital market. So how to build a fair, reasonable and efficiently protection system ofshareholder dividend rights is very important.Right to dividends is the right of investors, based on the request of shareholderseligible to enjoy the company to pay their own surplus profits. It can be divided intoabstract and concrete shareholder right to dividend. Specific right to dividends is inessentially a creditor’s rights, so its protection is in accordance with law of obligation,there is no controversy. But for abstract shareholder dividend rights, whether it is inthe nature and conditions of the exercise, with particular shareholder dividend rightsare not the same. You can lay a solid foundation for further research to clarify thebasic theory of the shareholders dividend rights. In addition, the dividend rightsprotection, which is based on the dividend distribution, needs "corrective justice",reflects that the relief theory is unfair treatment, nor are the requirements of fiduciaryduty, and dictates the pressure of the capital market.You can clearly see the obstacles of shareholder dividend rights are difficult toachieve by analyzing the status quo of dividend distribution. In our country the factsof hindering the realization of shareholder dividends include the problem of internaloversight mechanisms and government’s inappropriate behavior. Board ofSupervisors often act as a "rubber stamp", and the role of independent directors is notindependent. The unreasonable tax policy and the measures of China SecuritiesRegulatory Commission need to be further reviewed. With regarding to the internal implementation mechanism of dividend rights, it isrecommended to promote shareholder activism, coordination between supervisors andindependent directors, the Board of Supervisors to stimulate oversight functions,improving elected independent directors, remuneration and responsibility. As for theoutside dividend rights implementation mechanism-government regulatory issues,government should intervene dividend distribution is necessary, but previousgovernment intervention in practice, needs to further improvement of governmentregulation. Government should carefully maintain proper distance, the company willnot blur the boundaries between autonomy and government regulation.Judicial remedy for dividend rights of shareholders in addition to the company’sinternal and external oversight mechanisms of government regulation market, isanother important measure to protect shareholder dividend rights. However, judicialrelief, either in theory or in judicial practice, is a huge controversy. The judicialremedies should respect the autonomy of company, should also respect the businessjudgment of directors or executives. But for malicious or improper behavior ofdividends distribution, foreign judicial practice reveals to us: judicial remedies shouldnot be negative, but should be the measures to solve this problem.