On The Binding Effect Of Shareholder’s Meeting Resolution

As the highest authority of a company, general meeting of shareholders has theright to make decisions on important matters according to the Articles of Association.Shareholders exercise their voting rights at the shareholders meeting and form theresolution of shareholders meeting. At the moment, the topic of defective resolutionand its relief is frequently discussed. This paper aims to analyze the questionregarding the legal validity of the resolution itself is neglected, especially the questionthat whether the adopted resolution legally binds on shareholders, director, board ofdirectors, supervisors, senior managers of the company and a third party. This papercomprises in the following four chapters:The first chapter,“the legal nature and effective factors of resolution ofshareholders meeting”, expounds the legal nature of resolution of shareholdersmeeting under perspective of group behavior on the basis of analyzing two theories. Italso sets forth the requirements of validity of resolution, which is the premise forresolution’s binding on others.The second chapter,“the resolution’s legal binding on shareholders”, expoundsthat the resolution of shareholders meeting shall bind upon all shareholders of thecompany, including those who vote against the resolution or fail to participate in themeeting. When shareholders fail to act in compliance with the resolution of shareholders meeting, other shareholders shall have the right to claim forcompensation according to the principle of shareholders’ Fiduciary Duty.The third chapter,“the resolution’s legal binding on others in the company”,respectively discusses the resolutions legally bind on directors, board of directors,supervisors through analyzing the legal relationship between company and them. AsCompany Law has not regulated the measure for pursuing responsibilities ofnonperformance, this paper provides some advices to legislation.The fourth chapter,“the resolution’s legal binding on those outside the company”,puts forward the view that resolution of shareholders meeting has no effect on theparty outside the company, and furtherly, when deciding on the agreements or otherbehavior made based on the resolution is valid, we shall take the system of bona fidethird party into consideration.