Discussion About Cumulative Voting System

With the development of the system of companies, the power of companies transfers from the shareholder's meeting to the board of directors gradually. Who masters the board of directors means who can affect the common operation and management of the company, and realize his own wish through the board of directors. So which system to be used to elect directors is more fair is one of the most warmly discussed questions in theory area. The cumulative voting system draws our attention at the right time .The goal of the cumulative voting system is to protect the profit of minority shareholders, and let the minority shareholders can also join the board of directors to participate in operation and management of the company. At last ,the cumulative voting system as a new system of electing directors appears in new Corporation Law which was put into practice on January the first 2006.The cumulative voting system is transplanted from outland, so it is very new to our country in practice, and it has defects itself. So there are a lot of problems to be solved when it is carried out in our country .The article intends to begin with the comparison between the cumulative voting system and direct voting system, discussing about the origin and evolution of the cumulative voting system, studying the mathematics formula, discussing about the dispute about the cumulative voting system, and studying the problems and the ways to solve the problems considering the system itself and the condition of our country.The article is divided into three parts.The first part is about the introduction of the cumulative voting system. At first, this part compares the different results between the cumulative voting system and direct voting system .It introduces that in order to avoid majority shareholders using their power excessively and to realize the fair and democratic management of companies, we can not blindly insist on"one share, one vote"principle and majority rule, and we have to modify the traditional system of electing directors. Second, this part discusses the origin and evolution of the cumulative voting system. We can see the mode of legislation developed from mandatory legislation to permissive legislation through the introduction about the origin and evolution of the cumulative voting system in America, Canada, Japan, Taiwan Area, and mainland in China. Third, this part discusses the mathematical formula of the cumulative voting system. The formula helps us know the cumulative voting system more deeply. We can count out the least share rate to elect responding director seats that helps shareholders design the best voting plan. At the same time, it lets shareholders realize clearly that the more directors to be elected the better to minority shareholders to elect their representatives.The second part discusses the different views about the cumulative voting system. There are two voices since the birth of the cumulative voting system. There are two conclusions about the cumulative voting system. One is negative group, the other is positive group. The two groups have different views. But is inevitable to put the cumulative voting system into practice to protect the profits of minority shareholders, and prefect the administer structure of companies and so on.The third part discusses the problems and countermeasures about the cumulative voting system in our country. Though the cumulative voting system has lots of advantages, there are also lots of problems when it is put into practice. For example, the resolution system of the board of directors decides the limitation of the function of the cumulative voting system. The cumulative voting system has no meaning to the minority shareholders who hold too small rate of the shares. It is impossible that minority shareholders act together to use the cumulative voting system. The law about the cumulative voting system is not prefect. Majority shareholders use a lot of methods to avoid realizing the cumulative voting system. So today, the duty to us is to prefect the cumulative voting system positively. We can revolute the structure of holding share, and change the phenomenon that one shareholder holds large part of shares. We can limit the right of majority shareholders to vote, and can stipulate the lowest number of directors and so on to prefect the cumulative voting system.