Chinese Corporate Management Structure Of Publicly Traded Companies And Protection Of Rights Of Share-Holders

The rights of share-holders refer to those rights of share-holders that entitle them to obtain economic benefits and to participate and supervise operations of companies based on their capital contributions to their invested companies. The rights of shareholders involve not only share-holders' interests and rights of their own but also the interests and rights of the corporate management personnel, the staff members, clients, creditors and even the whole society. The essential principles for protection of shareholders' rights are the principle of limited liabilities of share-holders and the principle of equality of share-holders.The issue of share-holders' rights is a systematic project, which is the prior issue to be dealt with in theory and practice of corporate law. In a sense, corporate law is the law on protection of share-holders' rights. Corporate management is the key to corporate operations. Naturally, the improvement of corporate management is the focus to protect share-holders' rights. Each element of corporate management plays a different role: the role of the board of share-holders is mainly to bear risks; the board of directors, as a standing organ of a company, is mainly involved in strategic guidance and decision-making; the management personnel composed of the general manager and other senior staff is authorized to manage and operate and the board of supervisors, as a supervision organ, is mainly responsible to supervise and examine the activities of the board of directors and the management personnel.Whether or not the board of shareholders can effectively operate within the corporate management structure is directly related to the execution and protection of the share-holders' rights. Only when the authority of the board of share-holders is properly maintained and its full power to make decisions is secured without facial formalization can we expect to fully protect share-holders' rights. Based on the principle of equality of share-holders, protection of share-holders' rights is not to bedoubted and the issue to protect minority share-holders' rights is a common and prior issue to be resolved. Therefore, in the process of establishing corporate systems, emphasis must be laid on such issues as strong protection share-holders' right of knowledge, cross-examinations, request to call for board of share-holders meetings, the right of minority share-holders to call for board of share-holders meetings, to submit proposals, to vote and to seek to judicial relief so as to avoid misuse of vote by majority share-holders.The board of directors and the management are the corporate backbones with the function of decision-making and operations. The responsibilities and power of the board of directors and the board of share-holders should be clearly defined in order to avoid potential conflicts between the board when they exercise their powers. Also, in order to avoid impact on the board of directors caused by misuse of vote of majority share-holders, the existing system of independent directors adopted by publicly traded companies should also be adopted by non publicly traded companies. In order to avoid damages to share-holders' rights caused by misuse of power of directors and the management, it is necessary to reinforce the obligations and responsibilities of managing directors and manages.The board of supervisors, as a lawful supervision organ, should play full role in improvement of operations and protection of share-holders' rights. Impartiality and independence of the board of directors should be maintained. The right of supervision of the board of supervisors should secured in the articles of incorporation and in the law. The board of supervisors should be provided with necessary convenience for their exercising full powers to supervise the board of directors and the management.