The Law And Economic Analysis Of Voting Trusts

Whereas the ultimate intention of exercising the voting right by the shareholders is to control the company, therefore, the Americans, basing on the traditional trust system, have ably established the shareholder voting trust, which can control the management of the company by renewing integration and centralizing utilization of the voting right. In practice, it has demonstrated some distinctive system advantages in the aspect of protecting the small and medium-size shareholders, redistributing the rights and interests, ensuring the companies reload, making up the vacancy of the state-owned main body and disputation of the controlling interest in the China-Foreign cooperation. The voting trust is one of the important systems in the common law.However, in the case of speedy development, continuously increasing demand of diversified systems, and the constant happen of the successful cases, the voting trust still lacks of regulation, therefore, it can not obtain any corresponding restrict or relevant protection. With regard to its necessity to found the system in our country and whether the advantages of the implement are far more than the disadvantages, many scholars have made some investigation and discussion.This article attempts to analyze from the economic of law angle, and to explain the necessity of voting trust foundation in our country, with the help of some synthesize analysis method, for example, comparative analysis, demonstration analysis and so on. By transaction cost analysis, the article tries to point out that the cost of exercising right under voting trust is lower than personal exercising. With The pig' payoffs, it brings out that the voting trust can be a kind of competitive mechanism in order to improve the ratio between cost and benefit of the small and medium shareholders, the probability of success in exercising authority and "free riders" phenomenon. Then, through the Game Theory of "share benefits" and "private benefits", it proves that the voting trust can restrict the "private benefits" behavior of the share holds. This article, finally, indicates that the relevant legislation should be proclaimed for the voting trust, standardize its operation and confine the moral risks of the bailer, by information exposure of the bailer and the trust protector system.