Research On Legal Regulations Of Class Voting In Chinese Joint-Stock Companies

As an integral part of classified share system,class voting plays important roles in protecting rights of classified shareholders,balancing benefits among shareholders of different share classes,between classified and ordinary shareholders,and resolving their conflicts in rights.For the benefits of a minority of classified shareholders' rights,it aims to protect these shareholders' interests on the premise that shareholders exercise their rights to vote based on the proportion of shares or contributions.For the purpose of helping companies break away from their business predicaments arising from conflicts of rights between majority and minority shareholders,it protects classified shareholders' rights from infringement of resolutions on general shareholders' meetings under the control of ordinary shareholders and conforms to principles of equity equality.Minority shareholders' choices of legal mechanism for protecting their interests are dependent upon how majority and minority shareholders find a balance between rights and interests in face of limited corporate value in certain area,era,economy,market and case.As system of preferred shares was formally introduced into China,class voting system has been put into operation as an important mechanism for protecting rights of preferred shareholders too.Some normative legal documents have been further prepared for class voting since the nineties of the last century,including class voting system for shareholders of A/H shares,shareholders' voting system for social public shares and current preferred shareholders' voting system in pilot areas of preferred shares,so class voting system has been commonly adopted and practised in Chinese companies.However,there are also evident problems.First of all,Chinese legislations about connotations of classified shares and class voting are still imperfect.Although they have been more or less mentioned in the Requisite Provisions for Articles of Association of Companies Listed Overseas,the shares are only divided into domestic and overseasshares based on the places where they are listed.Several Provisions on Strengthening Protection of rights and interests of social public shareholders have just defined shares on the basis of distinguishing tradable shares from non-tradable ones under the current background of equity allocation,so they are not significant for the era.The definitions of classified shares and class voting haven't been mentioned in the Pilot Management Regulations of Preferred Shares.Besides,legislations about scope,procedures and recovery mechanisms of class voting are vague in China without a clear system.Hence,Chinese class voting has some problems such as uncertain scope of voting,unclear procedures and incomplete recovery mechanism.Concerning judicial reliefs of class voting,no special or pertinent rules have been established in Chinese laws and regulations.Thus,people can only refer to reliefs for ordinary shareholders stipulated in the Company Law of the People's Republic of China.In spite of numerous problems with class voting system,China has accumulated many experiences for improving the voting system through long-term theoretical investigations and practices.Besides,relevant provisions of Chinese class voting system can be enriched by summarizing lessons and learning from foreign legislations,in order that the roles of the system can be given into full play to regulate interest of different shareholders.Only if the deficiencies of Chinese legal regulations are clearly recognized can the interests of minority and majority shareholders be balanced in their cooperation to jointly promote corporate development.In light of existing problems with the legal regulations,it is firstly necessary to clearly define classes of shares,class voting,rights for different classes of shares and corresponding changes,in order to lay a foundation for identifying scope/procedures of class voting,recovering voting rights and improving judicial reliefs.Secondly,“changes to rights for different classes of shares” shall be considered as scope of class voting,and standardized by exemplifying legislative methods in a generalized manner.For class voting procedures,lessons can be drawn from clear provisions about procedures of ordinary shareholders' meetings and all aspects about resolution in classified shareholders' meetings in the Company Law of the People's Republic of China.In particular,the proportion of voters for passing a resolution shall be determined according to characteristics and importance of voted matters.Furthermore,classified and ordinary shareholders shall own an equal voting rights in recovery of their class voting,which shall be recovered within a year.At last,efforts shall be made to formulate provisions about classified shareholders' valid applications,lawsuit cancellation,interrogation of vicious vote counters' civilresponsibilities under the inspiration of ordinary shareholders' rights of relief in the Company Law of the People's Republic of China.