Research On The Information Disclosure System Of The Proxy Solicitation In The Public Companies

The information disclosure of proxy solicitation in public companies, which isfavourable toward performing the “seducing” function of solicitation materials andprotecting the voting rights of the solicited shareholders, is that anyone solicitingproxy should fully disclosure all material informations about the matters on which theshareholders are to vote by delivering the solicitation materials to the solicitedshareholders. Perfect information disclosure system will prevent the proxy solicitationto be abused by the person soliciting proxy.Though started late, proxy solicitationwill play an increasingly important role in company governance with development ofthe ownership structure of the public companies in China. However, the imperfectionof legislation in the information disclosure directly restricts the positive function of it.Therefore, it is necessary for us to establish the information disclosure system ofproxy solicitation in public companies in China.To establish the system, we will mainly focus on the principles of the disclosure,the subjects, the contents, supervision pattern and relief system. The person solicitingproxy should provide adequate informations to the solicited shareholders under thethe guidance of “authenticity, completeness and accuracy” principles, but he will beexempted from disclosure if the solicitation is by dissident shareholders and thesolicited shareholders are less than ten persons. Legislators shall place particularemphasis on formulating a detailed and operational contents of information disclosuresystem. The information required in the solicitation statement depends on thedifferent matters and the person who is soliciting the proxy, the management or thenonmanagement. Besides, the solicited shareholders should be permitted to vote termby term in proxy card so as to prevent “bundled authorization” in proxy solicitation.As for the supervision pattern, we should stick to the principle of “market return tothe market”. The person soliciting proxy must submit the solicitation materials to thesecurities regulatory authorities for the record before delivering them out. If theperson breached the duty of information disclosure in proxy, the solicitedshareholders have the right to an effective remedy by law. Administrative interferencemeasures should also be adopted by the securities regulatory authorities before theformation of the resolution flaws of shareholders meeting. The solicited shareholdersalso can be entitled the right to get compensation or repeal the resolution ofshareholders meeting through civil litigation after the formation of the resolution, ifthe solicited shareholders are damaged by the defective information disclosure in proxy solicitation, and meet the condition of “materiality”, that is the informationwhat a reasonable shareholder would consider important, and “transaction causation”,that is the proxy solicitation be “an essential link to the accomplishment oftransaction”.