Research On The Principle Of Majority Rule And Protection Of The Minority Shareholders

The majority rule is Company Law's fundamentals, proving the equal principle of share. According to the majority rule, the controlling shareholders who hold the most share could decide general meeting of shareholders'development. In order to achieve their biggest profits, the controlling shareholders abuse the majority rule and doing the harm to the benefits of the minority shareholders. Therefore, Company Law in modern times has persisted in the majority rule and at the same time, it has nurtured completed law system to overcome the disadvantages of the majority rule. The paper which has learned from others'works tries to have a research for the majority rule, discussing some measures to protect the rights of the minority shareholders and being look forward to making the relevant theories more completed. The text has four parts: first, the common theories of the majority rule; second, the rational recognition of the majority rule; third, the measures to prevent and remedy the abusing and dissimilation of the majority rule; fourth, the problems and solutions to our companies'running systems.The first part analyzes the common theories of the majority rule. The majority rule means that the controlling shareholders decide the general meeting of shareholders'development and the law considers the shareholders'will as the general meeting of controlling shareholders'. So the majority shareholders'will could bond the minorities. According to the rule, shareholders will realize the rights on the grounds of their share. It couldn't be carried out until the item is permitted by the most shareholders. Due to the requirements of the autonomy principle of private law and the needs of corporate and capital joint, we choose the majority rule undoubtedly. Besides, the equal principle of stockholders determines the logical fundamental of the majority rule. With general meeting of share holders generating and development, the majority rule in Anglo-American law system is established gradually and the process which is how to establish the majority rule experiences from reaching a consensus to the majority rule. The theory that the mainland law system affirms the majority law evolves in the autonomy principle and corporate and capital joint. The autonomy Principle of Private Law is the basic fundamentals in Private Law area. The majority rule in Company Law is one reflections of this principle. The majority rule has the functions of encouraging and stimulating the investment's enthusiasm and improving company's running efficiency.The second part states the rational recognition of the majority rule. The absolute implement of the majority rule makes the shareholders actually unequal. The shareholders who hold most shares could control the company's affair and become the controlling shareholders, therefore, the minority shareholders'voting rights will be insignificant and the phenomenon of"take a life"widely generates. There are a lot of cases of"Domination of single shareholders"and random voting by the controlling shareholders has been seen in our country. According to the majority rule, the will of the minority shareholders is determined by the controlling ones. When there are different benefits among the controlling shareholders, the company and the minority shareholders, the company and the minority shareholders, in order to pursue the biggest profits, the controlling shareholders improperly use their rights and make their will take the place of company's will, In this way, the company and minority's right is possible to be violated and being abusing the majority rule. The majority rule indeed brings on some disadvantages when it can encourage in vestments and improve the company'efficiency. The majority rule is the democratization-making, however, we couldn't avoid this disadvantages'influence. The fact that the minor is submitted to the major rules is common in the major's tyranny. Besides, the voting's result is possible to be controlled and democracy couldn't realize the equality in nature. The dissimilation of the majority rule prevents the realization of equal principle of stockholders, impairing the initiative which the minority shareholders manage the company and making the general meeting of shareholders not work. The illegal acts that abuse the voting rights have the legal reason. There are many cases about the dissimilation of the majority rule and it displays that the controlling shareholders abuse their rights and violate the minority's benefits, therefore, it need to remedy the dissimilation of the majority rule according to the law.The third part is a discussion of some measures to prevent and correct the results of the abuse and dissimilation of the majority principle. The dissimilation lies fundamentally in the controlling shareholders'abuse of the majority principle. Therefore, the countries restrain the controlling shareholders from preventing and correcting the dissimilation through law. The measures reflect in these aspects: endow the shareholders'with the honesty duty; restrain the controlling shareholders'voting rights; strengthen the protection of the minority shareholders'in order to reach a balance between the minority shareholders and the controlling shareholders; the strengthen of the minority shareholders'rights contains the right of calling shareholders'committee, right of motion, repurchasing right for dissent shareholders, etc; when their right are impaired, the minority shareholders can appeal to the court and compensate for the damage due to the abuse of the majority principle.The fourth party from the perspective of the company management states the principle of restriction of the abuse right and protection of minority' right On a basis of the different definition of the subject and object of company management and the source of right of company management, the company management differs in inner management and outer management. This part focuses only on inner management. The inner management refers to the management under the corporation system. Our country's Company Law sets that company's management system consists of shareholders'general meeting, board of directors, board of supervisors and manager. The shareholders'general meeting has the final control. The manager has the running right and board of supervisors is to supervise. These four powers balance with each other and make up the company's inner management. This right of management, out of recognized by the Company Law, comes out of the principle agent relationship and serves as the basis of the company management. The shortcoming of our country's meeting system reflects in these aspects: the share holders'general meeting is formalized, the arrangement of the rights in side the board of directors is unbalanced and the running rights are extraordinarily intensified; the board of supervisors can't supervise effectively. The solution comes out that, we should reform the constitution and work system of the board of supervisors, and set up independent supervisors.