Legal Protection Of Minority Shareholder's Rights In Stock Corporation

Based on the rules of "equality" and "majority principle" among the shareholders, stock corporation is a modern corporate form with many characteristics, such as being easy to raise capital, good corporate governance and clear property rights. However, many majority shareholders misuse the "majority principle" to prejudice the minorities and corporation.In China, almost all of the stock corporations came from old state-owned enterprises, as the result of restructuring. As a matter of fact, most of the newly established stock corporations haven't changed their corporate governance yet. That's why in the history of Chinese stock corporate development it is common that the majority shareholders take their advantage of being a majority to prejudice the minorities. This has been had a bad effect on the development of stock companies, the confidence of the investors and the Chinese economy. Therefore, to protect and remedy the minorities who are prejudiced has become one of the urgent problems in the construction of the Chinese legal system.By comparing the difference on how to protect the minority shareholders between domestic and foreign legal systems, it is not difficult to find out that contrast to the situations of Chinese minorities, their counterparts in western countries are enjoying a much better minority remedy system. In China the following problems must be solved urgently: l.regulte the majority shareholder's conduct; 2.strenthen the board's fidelity to all shareholders and the independency of the board; 3.strict regulations on the medi-agency; 4, perfect the lawsuit system for the investors; 5, build up Investor's Right Protection Association. Although in the current Chinese laws, regulations and regulatory documents many rights have been granted to the minorities and some remedies have been provided for them, effective minority shareholder remedies are still needed. To improve the current situation of minority shareholders, derivative action shall be introduced promptly into Chinese Company Law and the Chinese Securities Law should be amended correspondingly as well.