Defective Shareholders' General Meeting Resolutions

General meeting of shareholders is of overriding importance in the inherent structure of modern corporations. Each shareholder exercises its control over management through attending the meeting. Yet, such exercise is not an arbitrary one, as every shareholder is supposed to vote on a variety of material subjects, like structure of the company and allocation of rights to control over the company, to actualize its engagement in the corporate’s management.Considering every single shareholder possesses its own preference, the convening of shareholders’ meeting is to a large extent a manner to harmonize most of the discrepancies and compromises by and between the shareholders. Consequently, the meeting’s resolution is produced. In actual practice, the Company Law of the People’s Republic of China (hereinafter referred to as the Company Law) currently in effect finds itself pressured in coping with the ever-changing happening of defects in corporate resolutions. Before any attempt to seek remedies for such legislative loss, an insight into the nature of such defects within the resolution is a must, and that’s where the value of this paper resides.This paper is divided into six parts. Among which, from Chapter I to Chapter V elaborates on the procedural defects in the resolution of shareholders’ meeting, while Chapter VI focuses on the material side of the defects.Chapter I casts a general view on the defects of resolution of shareholders’ meeting. After a brief analysis of the formation mechanism of resolution of shareholders’meeting, this paper extends its view on the issue of alienation of the resolution in corporate governance. Horizontal comparisons and vertical studies are made accordingly in the subsequent section.Chapter II is intended on the classification of the defects in resolutions. Academic communities as well as legislators of different continental legal origins contend differently upon such classification issue. This chapter wakes up to this divergence and offers an analysis to this issue. In the subsequent section, this paper gives insights into a special sort of defect existed in the resolution, the failed establishment of resolution.Chapter III focuses on the defects existed in the convoking of the meeting. As convocation prerequisites the convening of shareholders’ meeting, this chapter elaborates on the convoking right, the presiding right and the notice to shareholders for convening the meeting to further the study of the possible defects that might give rise to the invalidity to the resolution.Chapter IV discusses the probable defects produced from the debating process of the meeting, including the personnel and the debate process. As the formation of corporate resolution requires a legal number of shareholders present and ample debate, this Chapter offers its view on the defects arising from the said aspects.Chapter V furthers the paper’s topic on the defects within the voting process, which embraces the misexpression of the shareholders’ wills, the proxy vote problem, the manner of voting issue and defects in signature and stamp of the resolution.Chapter VI sees the content side of the defects, including the abuse of majority vote on the basis of capital contribution, as well as the infringement of laws and regulations and the company’s article of association.