On Perfection Of The Legal System Of Proxy Solicitation In China

Proxy solicitation is the kind of system that could realize certain purpose by changing the way to exercise voting right. It enables the power of single shareholders that is too weak to influence the decision of the company as powerful shareholders become strong enough to influence the election of senior officials in the company. The combination of voting right and other systems results in the phenomenon that minor shareholders begin to"vote by hands instead of by feet".Proxy solicitation is an important legal system of corporate governance. This system was first set up in some developed countries like the USA and the UK, and contributed a lot to the administration and development of the companies in these countries. We didn't establish the system of proxy solicitation. But in the practice of listed companies, there are already some cases of using the systems. These cases reveal the urgent need to study and take advantage of the system. The object of my essay is the system of proxy solicitation in our country, analyzing the necessity and feasibility of setting up this system and the involved problems if we set up this system. My paper is divided into three parts:Part one analyses the importance of establishing the system of proxy solicitation in our country. Through the analysis of the concepts, classification and characteristics of the system; the comparison of characteristics between proxy solicitation and regular voting attorney; and the explanation of the effects and disadvantages of the system, it's clear that proxy solicitation is an important way of corporate governance.Proxy solicitation is very important in the operation of conference of shareholders and corporate controlling now. It has the following functions: it's very propitious to maintain the minimum number of the conference of shareholders; it could reflect the will of the shareholders most effectively; enabling the minor shareholders to gain controlling probably; it is propitious to the improvement of the structure of the corporate governance; encouraging the company to fulfill the social obligations. So I think, it will be more useful to introduce the system of proxy solicitation in China with the improvement for fund market.Par two mainly explains the necessity and feasibility to establish the system of. proxy solicitation in China . After Tong Bai Hui publicly collects voting attorney from the shareholders of Sheng Li, Kang Da in Guang Xi, International Mansion, Zheng Bai Wen, ect. Also take this kind of actions. In contract, there is no law to enough involved law in proxy solicitation.On the Collection of Voting Right for Listed Companie issued by Shen Zhen securities regulatory office is the earliest and the only regulation that regulate proxy solicitation. But this regulation is local and directive, and has no legal effects.With the development of securities market in our country, the structure of share in listed companies is undergoing great changing quietly. The structure is becoming dominated by the national share. Under this structure, the majority of the shares is shared by some major shareholders with no shareholders with absolute power. To collect other shareholders'voting attorney is the propable, even the the only way to control the company.Part three analyses the basic theories about proxy solicitation, including the definition of the collection, the subject of the collection, the number of collection, the reveal of information, the ban of paid collection, the shareholders'right of suggestion suggest, the way and effects of commissions, the legal responsibility of inveracious interpretation and misguide, and the choice of monitor mode.The definition of collection. Explain from the necessity, the operation scope, the exception, and the Exemption of collection in order to make clear of proxy solicitation. The qualification of the collectors. There are two different theories about whether the collectors must be a shareholder in practice and in theory. I think under normal circumstances, the collectors collect voting right in order to influence the decision of the company, even to get controlling of the company. If the collectors are not the shareholders, they usually ignore the future of the company for getting self-interest. So in the future, the collectors must come from the board of directors, the independent directors and the shareholders. Moreover, the qualifications for the shareholders include the number and the time of share-holding. The qualification will become much higher if the number of collection is more.The number of collection. There are two opposite opinions about whether there should be some limitation of collection. There should be no limitation in the future legislation because this limitation will protect the present administrators and will be bad for equal competition. It will not be propitious to exert the function of the system of proxy solicitation.The revelation of information. The basic concept of monitoring the system of proxy solicitation is the revelation of information. This part will introduce America's 14A additional table mainly. We could learn something from the America's 14A additional table.The ban of paid collection. Paid collection could do harm to the purpose system of proxy solicitation. If the collectors pay for the collection, the choice of the shareholders'voting attorney could be influenced. So the law should ban paid collection.The right of suggestion of the shareholders. Explain the subject, the scope and the time of suggestion. There should be some limitations for the collectors based on the number and the time of share-holding. And the right of suggestion should be only on the major decisions of the company. And there should be separate regulations on the time of decision in the annual conference of shareholders and temporary conference of shareholders. The way and effects of commissions. There should be some limitation on the scope of free appreciation for the collectors. It should be allowed to declare by fax in advance, but in the conference, the original paper should be presented. The collectors and the collected should discuss whether the attorney should be repealed and the procedure and limitation of repeal. And we could learn something about the right of shareholders in disagreement from the US legislation.The legal responsibilities for misinterpretation and misguide. There should be fewer limitation on the right of action so that the shareholders could protect their own rights. And there should be some improvement in legal responsibility in civil, administrative and criminal respects to protect the interests of the victims better.The choice of monitoring mode, As the collectors must reveal the information fully in the collection process, the other party could understand the information from this. So we could choose the mode of recording in monitoring.