Company Limited On The Shareholder Voting System

Undoubtly, voting right occupies the core among varying systems within company law, as Easterbrook and Fischel, American scholars, describe it as the second quality only inferior to limited liability. In view of existing situation of company management that the major shareholders dominate the company and neglect,even invade the company and minor shareholders at will in China, a complete system of voting should become an efficient instrument to improve company management and satisfy all shareholders impartially.The voting right by shareholders is their fundamental and important one. We can say voting right is essential, even only means, through which shareholders participate in the company operating. Any shareholders must not deprive others of voting right, one of right of common-benefit ,or limit it through company regulations and any other ways, except shareholders own consent. Inevitably, the principle of shareholders equality, one of the basic spirit of corporate law, is evolved to capital (share) equality. Based on the limited liability from shareholders, capital equality is not absolute but relative, that is, in proportion to shares, instead of being equal for everyone in spite of their shares, so that the risk proportions to investment policy-making. Therefore, one share-one vote becomes the fundamental rule that is established by company law all over the world. Although, " decision by mojority " often brings about side effeces.Among ways of current voting, vote in person is the most ordinary pattern defined by our Company Law. And vote by letter is increasingly popular to achieve the board' inner requirement of "full attendance". At the same time, Mr. Liang Shang-shang asserts that voting right tends to be a tool through other two important patterns, vote by proxy and voting trust. But it is very regretful that Company Law covers neither vote by letter or voting trust nor vote by proxy in detail , especially proxy solicitation-heart of the way. Furthermore, with regard to classified voting used widely in the current reform of seperation of share rights between negotiable and non-negotiable shares, some regulations should be urgently improved, which comefrom Some Acts about Enhancing Protection for Rights of Negotiable shareholders by China Securities Regulatory Commission. In a word, it is very significant to perfect our laws and regulations of voting right promptly.In detail, on vote by proxy, the deputy need not be limited to the circle of shareholders of the company on condition that shareholders entrust their vote with others of their own accord, and agents collected letter of attorney must be shareholders of the company with a given amount of share on condition that proxy is collected on others' own initiative. For the purpose of protection all shareholders' interests, business of voting right should be strictly prohibited, and regulations of news announcement must be rigorously controlled duing collecting letter of attorney. Concerning vote by letter introduced wholly to public company, both the types of shareholder board and the issues voted should not be confined to the given range, but the face of ballot is uniformly designed by China Securities Regulatory Commission, while the company must supply shareholders with the sufficient details of a case necessary to vote by letter. Then, Conclusion of agreement of voteing trust should be based on the proper causes and legitimate purposes, and collection of state voting should not be forbidden so that the collectors are encouraged to search for the new way to administer state shares. With reguard to the classified voting, we must define the important conditions of attendence and voting come from negociable shareholders, offer simple and secure platform of voting through network, which is under supervision, so that we can eradicate new monopoly of voting right caused by the dominant shareholder among all negociable shareholders. Finally, as concerns cumulative voting,it is necessary that directors and supervisors should be elected together in order to achieve the founction of protecting minor shareholders by means of increasing people voted and raise the probability that minor shareholders are clected.Equality is the eternal value of Civil Law, as is known to all. For equality among shareholders, the rule of "decision by mojority" has become the basic principle of running shareholder board. Also for equality — substantive one among allshareholders, it should be turned into an organic part of voting right system to limit the right from dominant shareholder, self-supporting shares, mutual holding shares and particular interests' shares.The article contains three parts. In part I ,a general statement about voting system of limited-liability company, this part illustrates voting right' idea, nature, contents and trend. Voting right'exercising principle and methods, and restricted objects are discussed in part II of voting right'exercising and restricting from shareholders of limited-liability company. In part III, opinions about improving our voting system of limited-liability company, the author suggest that the rules of collecting letter of attorney should be defined, that vote by letter be introduced to all public companies, that classified voting be established, and that cumulstive voting be further improved.