Research On The Legal Issue In Private Capital Participate In The Governance Of Small And Medium-sized Banks

With the rapidly development of private economy and the needs of the small and medium-sized banks,private capital invest in the banks is becoming more and more easily.National policies and laws began to encourage and guide private capital’s investment.There is a lot of private capital invest in the small and medium-sized banks because of the channels unblocked and the market’s requirements recently.However, the private shareholders can not really participate in the governance of the bank due to the lack of security policy.This situation makes it hard for the advantage of private capital to paly.The private capital’s own reasons, excessive concentration of equity and unreasonable internal governance structure is the main obstacle for private capital’s participation.Based on the analysis of our country’s reality,The article try to explore and research legal system to safeguard private capital to participate in the governance of bank.There are four parts in the text.In the first part,the main content is the basic situation of private capital’s investment of small and medium-sized banks investment.Firstly,defining the basic concept.The private capital refers to in this article is distinguished from the state-owned capital and foreign capital.It follows the market operating mechanism form of capital.Secondly,analyzing the small and medium-sized banks’ huge appeal for private capital from the perspective of investment.Thirdly,the introduction of private capital in the process of different types of small and medium-sized banks.Pointing out the trouble that private capital easily invest but hardly particpate.The second part provides the basis for private capital to participate in the management of small and medium-sized banks from the theory and reality.First of all, in order to provide theoretical support for the participation,the article puts forward the theory of "shareholders equality", "equity equality", "equity checks and balances",and "investors’ protection" from the perspective of corporate governance.At the same time quoted the "vulnerable groups’ protection" theory in sociology.Secondly,the positive impact of reality are taken into consideration.Private capital participate in the governance of small and medium-sized banks can enhance financial activity.Alleviated the current situation of the financing difficulties of small and medium-sized enterprises,thanks to the domination of the state-owned Banks.Avoid medium-sized banks’ homogeneity competition because of state-controlled.It also can be able to arouse the enthusiasm of private capital as much as possible.The third part mainly analyzes the deep-seated reasons for the difficulties of private capital to participate in the governance. First of all, the primary cause is the highly concentrated ownership structure.The situation of state-owned shares is highly concentrated make bank governance system failure.This kind of equity structure have different performance in different types of small and medium-sized banks.Secondly,the formalistic general meeting of shareholders lead to private shareholders lack of discourse power in board.Finally,profit-driven and nearsightedness of private capital is easily to cause ethical risk.It caused regulators, banks, and the social public’s trust crisis for private capital.It hindered private capital’s participation in the process of small and medium-sized banks.In the fourth part,the article put forward the legal system to safeguard private capital’s particpation from different prospects.First of all, to optimize ownership structure according to different types of small and medium-sized banks,in order to moderate dispersion of equity.Secondly,improve the influence of private shareholders.Through perfecting the rules of procedure of the shareholders’ meeting, strengthen balance of the board and the independence of the supervisors to increase the participation of the private shareholders.Finally, to avoid the ethical risk of the private capital we need improve the mechanism of private shareholders’ selection,lock-up the period of private capital’s investment,strenghthen the responsibility of the private shareholders.Finally, to avoid the ethical risk of the private capital we need improve the mechanism of private shareholders’ selection,lock-up the period of private capital’s investment,strenghthen the responsibility of the private shareholders.Ensure that private capital can more effectively participate in the goverance of small and medium-sized banks.