The Balance Of Power And The Protection Of Small Shareholders

The current world's political and economical integration process causes a gradual convergence of the company's governance model,"shareholder-oriented model"has been widely recognized by national managers. Today when social capital is being increasingly concentrated, board of directors is difficult to access for underprivileged small shareholders, so the Board is almost entirely controlled by major shareholders. Small shareholders have become the vulnerable groups in modern corporation governance. On one way, they are worried about being against by company directors, on the other way, they had to prevent the plundering of major shareholders.As the company's trustee, directors control the company's management rights and decision-making power, they should be responsible for the maximize of the company's interest because they got salary from the company. To determine the obligations and responsibilities of directors, we should first understand the legal status of directors, on the base of which specific obligation assumed by directors to the company can be clarified. They should bear the legal responsibility in the case of breaching statutory duty. Efficient corporate governance requires the establishment of the company's balance of power mechanism, a sound system of protection of the rights of shareholders to find a suitable model of corporate governance in China's national conditions.China's 2005"Company Law"has made remarkable progress on corporate governance compared to the 1993"Company Law", but there are still some drawbacks. It's hard for small shareholders to balance major ones, so their status of vulnerable groups didn't get fundamentally changed and they still have to bear the double exploitations from the directors and major shareholders. On this condition, legislators may well consider to limit the right of shareholders to nominate, which can well avoid the exploitation from major share holders. It can also stimulate enthusiasm for small and medium shareholders, enhance the liquidity of shares, and improve the management of democratic and scientific. In order to better safeguard interests of the small shareholders and the country's economic order, the legislators should draw upon the mature experience of corporate governance from developed countries based on our own corporate governance, further improve the relevant provisions of China's Company Law, and implement it through the flexible judiciary. This article is divided into three parts:The first section describes the legal status of directors, the directors'legal obligations and responsibilities to the company;The second part describes the protection of the small shareholder's voice;The third section describes how to regulate directors from abuse of power through the balance of powers and rights protection.