On The Right To Revoke The Corporate Resolutions

In1993,China issued its first edition of Company Law.Its historic mission wasto turn the state-own enterprises into modern corporations, which is symbolized byestablishing the shareholders’ meeting, board of directors and board of supervisors,commonly known as "three-unionism", instead of "the director or managerresponsibility system"provided in state-owned industrial enterprises law. Since theboard of shareholders and the board of directors become the core of corporategovernance, shareholders have right to express their view.The company is no longerunder one director (manager) dictatorship. However, under the principle of capitaldemocracy,minority shareholders can not compete with the major shareholders.Theirlegal rights might be suppressed.In2005,the Company Law was amended, theregulation of revoking defect resolution was brought in(This paper only discusses theregulation about suit to revoke company’s meeting).It was specified in the generalrules part. Compared with the the law of company issued in1993, the new companylaw paid special attention to leave more space for internal self-government ofcompany.As long as the resolutions of company shareholders’ meeting and the boardof directors’ meeting conform with the convening and voting procedures provided inregulations of law, administrative regulations and the articles of association,does notviolate the provisions of the company law and the articles of association either, theCompany Law confirm the their effectiveness. Thus, as scholars said the system ofresolution of company meeting is essentially a system of meeting.Therefore,moreattention should be paid to procedural justice. The Supreme Court gave clearguidance that whether company’s resolution is reasonable or not, whether it hassufficient factual basis is problems the company’s own. Judges should not intervenein it. However, when resolution of company meetings in violation of the articles ofassociation, which means there are flaws convening and voting procedures,shareholders, directors and supervisors might have the right to request court to revokethe those defect resolutions. But the voting procedures provided in the Law of Company are not detailed enough, in practice,company’s charter simply copied thearticles of association of the Company Law.Therefore, it is necessary to combine thejudicial practice to refine them.The relationship between regulation of revocation of the company’s resolutionand the desire to keep legal relationship stable is always tense.Whether the resolutionis company’s meetings having any flaw will inevitably lead to the consequences ofthe company resolution be revoked? For example, in practice, meeting notice periodmight less than period required in company’s charter for one day, but the shareholdershave known contents of the meeting through other way.In foreign countries, the system of discretionary was proposed,which means ifminor procedural flaws do not have impose on the resolution of company’s meetingthe judge have the right to dismiss plaintiffs’ suit. The author believes that it isnecessary to bring it in. Six cases was found on the China law information site,fromBeijing and Shanghai courts. In conclusion, on the basis of practical experience,thispaper put forward four proposals to amend it. Taking the possibility that any rightscould been abused into account, the Company Law provided that the defendant rightto comply the court request the plaintiff to provide security. But after the author read128court verdicts from Beijing and Shanghai, no plaintiff have ever provided security,I think,there is the possibility the defendant ignored their rights,however, if we say allcases are like is unacceptable. The system is too simple may be the key issue. Thispaper would like to contribute ideas to improve it from four aspects: the condition torequire security, the period to raise request, the consequences of not providingsecurity, how to determine the amount to be secured. Of course, concerning thepossibility shareholders or directors and supervisors take use of liquidity of share ofjoint-stock company to obtain improper benefits by taking the suits of revoking defectresolution. the author proposed to put restrictions for shareholders to revoke only ifshareholders has been shareholder before the notice of the meeting was issued. Inaddition, the last question this paper had to answer is that if the court revoke or notrevoke the resolution of the company, what is the effect of the judgment when thementry into force? This paper would like to responded it from two aspects.Most scholars recognized the judgment that plaintiff won the lawsuit could have the effect of expansion. But in my opinion, every judgment whether the plaintifffailed or not have the effect of expansion, which is concerned with the provisions ofCode of Civil Procedure of China. For this issue, I believe that it is necessary todistinguish whether the dispute resolution involved external legal relations, if itinvolves no third party of good faith,judgment should have retrospective effect.