Research On The Rights Balance System In Public Company’s Shareholders

Majority Rule is the fundamental principle of corporate law, which is the mechanism for forming thecorporation willing. It derives from the democracy in politics, and converts the voting basis from the“capita” majority to “capital” majority when majority rule is applied to corporations. This ruleencourages investment, speedups operational efficiency and embodies procedural justice. However, theapplication of capital majority rule distinguishes the controlling shareholders from the un-controllingshareholders. For the absence of relevant systems and rules, the controlling shareholder may abuses thecapital majority rule in order to achieve its biggest interest, which leads to the capital majority rule’sdissimilation. This thesis studies on the dissimilation by three parts for finding out a solution.Straight to the point, the first part point out that the capital majority rule dissimilates in practice. First,from both theoretical and legislative aspects, this thesis tries to define the concept of controllingshareholder and the criterion of “controlling”, and point out the reason of dissimilation is the controllingshareholder’s abuse of its controlling rights. Then defines the dissimilation and performs the empiricaland legal analysis upon the behaviors resulted from dissimilation in practice. Although the majority ruleis the inevitable extension of the principal of the equality of the shareholders, the absolute implement ofthis rule causes the inequality in substantial. Therefore, for rectifying the dissimilation, this rule shall return to the principal of the equality of the shareholders. It must be noticed that, in consideration of thelegitimacy of majority rule, the rectification dose not means the majority rule should be substituted, butabandon and improve.The theme in the second part is about the choice of the way to get the capital majority return, whichmeans a general provision change the traditional corporation law theories by imposing fiduciaryobligation upon the controlling shareholders. Hence, the necessity of the fiduciary obligation isdemonstrated from both academic and practical aspects; and the application in China is discussed bystudying the fiduciary obligations in different countries, to prevent controlling shareholder from rightabuse and protect un-controlling shareholders interests.Based on the study in the first two parts, the third part discusses the guarantee system for the return of thecapital majority decision rule. In general, laws and regulations in China have noticed the dissimilation ofthe capital majority rule, and established a relevant legal system to balance rights between controllingshareholders and un-controlling shareholders. However, because of some shortages, this system can notbe operated effectively. So the dissimilation shall be rectified by the following measures, including butnot limited to: limiting the voting rights of controlling shareholders, strengthening un-controllingshareholders’ right of convening shareholders assembly and proposal, and improving the cumulativevoting system.