Formal Response By The General Meeting Of Shareholders

How to overcome the negative influence of the formality of shareholders' general meeting is an important issue of company law. This essay begins with the reality of companies in China, applies evidence analysis, comparison analysis, and economy analysis. Based on the examination of the reality of shareholders' general meeting in Chinese shareholding companies, it analyses the root of shareholders' meeting formality by applying the basic principles of Chinese company law. And bases on the discussion, suggestions regarding Chinese company law will be made. Apart from the introduction and the conclusion, the essay includes three parts:The first part of the essay explores the reasons of formalization of shareholders' general meeting. It is argued that the main reasons are the principle of capital majority representation, considered choice of shareholders, one shareholder with majority shares, and the imperfect legal system. Majority rule gives the major shareholders opportunities to control the shareholders' general meeting by the capital advantages, thus induces the formality of shareholders' general meeting. Shareholders' general meeting costs the shareholders money and time, which causes the shareholders to make a considered choice, that is, not to attend the shareholders' general meeting. One shareholder holds the majority shares also causes the small shareholders to give up the opportunity of attending the meeting. In addition, the Chinese company law system is imperfect. There is an overlap between the right of shareholders' general meeting and the right of the board of directors, absent of detailed operative regulations about authorized voting mechanism and internet voting mechanism, and no minimum requirement regarding the number of attending of the shareholders' general meeting.The second part gives counter-measures regarding formalization of the shareholders' general meeting. It is considered that majority rule is a necessary principle for the shareholders' general meeting, and the minority shareholders' decision of not attending the shareholders' general meeting is a considered decision. What's more, the structure of one majority shareholding is the property basis for the stock company. Thus it was discovered that the aim of counter-measures regarding formalization of the shareholders' general meeting is, holding the Principle of Capital Majority Representation, under the background of shareholdings control in the hands of the majority and bearing the minority's considered decision in mind, to improve the shareholders' general meeting system of China by learning from the foreign experiences.The third part raises legal suggestions to resolve the formalization problem of the shareholders' general meeting. First, enhance the right of shareholders' general meeting. The function of shareholders general meeting must be emphasized, and the overlapped rights of the general meeting of shareholders and the board of directors should be given to the general meeting clearly. Second, define the minimum number of attending of the general meeting. It is suggested that the Chinese law should learn from the company legal system of America and Taiwan and regulate the percentage of attendance and the real number of attendance. Third, improve the authorized voting mechanism. There is only one single article regulates this mechanism. Reform is suggested from the aspects of qualification of agent, the formality of calling, and the ambit of authorization. Fourth, establish comprehensive internet voting mechanism. In order to facilitate the attendance of shareholders' general meeting, the rules of internet voting mechanism should regulate the mechanism from aspects of the applicable subjective and the procedure of the internet voting mechanism. Fifth, fiduciary duty should be imposed on the controlling shareholders. The voting right of controlling shareholders must be confined, that is, controlling shareholders should assume fiduciary duty to company and other shareholders.