On The Contract Construction Of Corporate Control

The system construction of corporate control is the core issue of corporate governance. Combined with the softening trend in corporate law reform around the world, guided by the idea of contract construction of corporate control, this paper has provided a comprehensive and in-depth contract analysis over several issues concerning corporate control, such as its formation basis, ways of exercise and anomie remedies. Based on the above analysis, this paper turns the system construction of corporate control back to the contract design between corporate participant parts. Besides the introduction and conclusion parts, this paper consists of four chapters. The main contents of this thesis are as follows:Firstly, the introduction part introduces the basic situation of corporate law reform in some countries around the world. Then it summarizes and reveals the trend of corporate law reform, and on this basis, it puts forward the concept of contract construction of corporate control and clarifies the theoretical and practical significance of this subject. Furthermore, the introduction part shows briefly the path selection and specific research methods in this paper, as well as the main contents and structure design.The first chapter, Basic Overview of Corporate Control. In this chapter, it firstly introduces how people consider the power of corporate in traditional sense and then gives appropriate comments. Subsequently, it redefines corporate power through reconsidering its inherent logic; from the perspective of the origin of power, it illustrates the mechanism of corporate power. Thereafter, centering about the point that corporate control originates from corporate power, it emphasizes the definition and classification of corporate control. Moreover, the evolution of corporate control model is gradually combed. In addition, it gives comprehensive examination and review on the corporate contract theory based on the position of sublation. It emphasizes the contract characteristics of articles of incorporation, and explains the existence of corporate law. Logically, this chapter is the basis of the following chapters.The second chapter, the Contract Basis of the Formation of Corporate Control. This chapter demonstrates the contract basis of the control powers held by shareholders, directors and stakeholders, such as creditors, and then describes the switching process between different forms of controls. The shareholders enjoy the ultimate control over the corporate. There are two reasons for this. On the one hand, they transfer the ownership of property in traditional sense to corporate. On the another, they take the company's most marginal risk during its running, and this gives them the optimum stimulation to exercise the control powers. Moreover, because shareholder is the ultimate controller in the company, the control powers of the board mainly comes from the shareholders' total authorizing. In order to guarantee the realization of shareholders' benefits, the directors are always required to assume fiduciary duties. And also, the stakeholders, such as creditors, can acquire control powers by signing in particular situations. Consequently, the generation of the control powers are completely contractual.The third chapter, the Contract Path of the Exercise of Corporate Control. This chapter focuses on the analysis of various exercise styles and its contractual nature of the control powers held by shareholders, directors and stakeholders, such as creditors, in the actual operation. As for the exercise path of shareholders controlling, the typical contract arrangement includes the following exercise styles: shareholder voting rights, proxy voting, settings of cumulative voting terms, voting trust, and the voting agreements. In the respect of the exercise of director's control powers, these exercise styles can be explained within the framework of contract: rules of procedural of the board, business judgement rule and proxy solicitation. However, the creditors exercise the control powers in different ways from that of the shareholders controlling and directors controlling. Their exercise styles are purely determined by the contract.The fourth chapter, the Contract Remedies for the Anomie of Corporate Control. This chapter mainly analyses various kinds of possibilities of abuse of control by shareholders, directors and stakeholders, such as creditors. It also provides a variety of strategies to regulate the anomie of corporate control from the perspective of contract. In order to guard against the controlling shareholders abuse their control powers, decision-making power can be agreed upon in a contract between shareholders; at the starting point in the contracting, the creditors can require the shareholders to abandon the shelter of limited liability rule and can also reach agreements with those companies that are lack of solvency. The transaction results and its relevant issues that based on limited liability can be written into the agreements. In this way, creditors can arrange some terms, such as a variety of effective self-help measures, into the contract. With regard to the probable situation that the directors may abuse their control powers, shareholders can set all kinds of customized contract duties with the strict liabilities for breach of contract as the supplementary. The above duties and liabilities can be formulated in the articles of corporation as well as director service contract. In addition to this, other stakeholders, like creditors, are probably to implement some potential opportunistic behaviours that will be against the corporate management after their actual control over the corporation. In this situation, the contract remedies will definitely be an effective self-help measures.The conclusion part summarizes the main ideas and research results of the above chapters, and reaffirms the concept of contract construction of corporate control. In the end, on the basis of the above, it reveals the adaptive characters of corporate control, as well as its significance.