Analysis Of Voting Trust

The problem of Agency Costs has been the focus when people talk about corporations. Being the linkage between the ownership and the control right of corporations, Shareholders' voting rights system makes progress in reducing agency costs and providing protections for minority shareholders from detriments. Except for Proxy Voting, Cumulative Voting and others, some foreign legislative departments and judicial departments put more emphasis on Voting Trust. In perspective of reducing agency costs, this article mainly discusses the components, roles and economic foundations of Voting Trust. Then it points out the same characters and differences between Voting Trust and other voting instruments. Furthermore, under the current atmosphere of the China capital market, we may face up with some obstacles when it is transferred from foreign countries. Finally, the article gives some legislative advices.This article is composed of four parts as follows.The first part consists of two chapters, analyzing the corporation law foundation of Voting Trust why the voting rights own to shareholders and the enforcement principle of voting rights. In the first chapter, the article discusses that voting rights own to shareholders but not to other participants has its law and economic foundations. The second one is about the law and economic foundation of the principle of"one share, one vote"and the paradox of the"majority capital decision"principle.The second part also consists of two chapters, which emphasizes on the problem of agency costs that voting trust may face up with, including the law schools'research on the problem of agency costs and the methods to lessen it. In the first chapter, it talks about the history of the research and the definition of the problem, including the monitoring expenditures by the principal, the bonding expenditures by the agent and the residual loss. Then it is nature to find out the methods to reduce agency costs, including the incentives such as Shares-Option and Management-Buyouts Plans, and outsider monitoring such as management market, corporate control market and Voting Trust, which may cause the new agency costs.The third part indicates the components of voting trust and its characters in reducing agency costs. In the first chapter, it clarifies the definition and features of trust, from which voting trust are stemmed. It shows the features of the separation of ownership and beneficiary right, the independence of trust and its special purpose, and the nature of trust is the diversity of property. In the second chapter, after expressing the suitable feature of corporate law that are proved by the discussion on the legality of America corporate voting trust in the statutes and the judicial experiences, the article focuses on the positives and the negatives of proxy voting, cumulative voting and voting trust. In the third chapter, the article provides the overview of the rights and obligations of the participants and emphasizes its unique role in satisfying different participants'demands in a trust voting, which is rooted in the theory of law and economic rationality. Then, it analyzes that voting trust can play a more active role in keeping the stability and constituency of monitoring than other indirect voting instruments to lessen agency costs.The last part mainly describes the transferability of voting trust under the atmosphere of the China capital market. In the first chapter, it supports some positive aspects in the adoption of voting trust. Then, the magnitude of some obstacles we have to face up with in the process of transferability of voting trust, including the communicating bridge between the two different law traditional countries, the core feature about the State-owned Corporations and the reality of trust in China, etc. Finally, the article supports the following advices, including broadening the adoption range of Trust Law to the voting right, transferring voting trust to Chinese Corporate Law in the"Opt-in Model"with legalizing the requirements of validity and absorbing the positives of the Business Judgment Rule. In a word, being the newly arrangement of shareholders'voting right, voting trust can promote the construction of the multi-voting system, lessen agency costs and protect shareholders from detriments.