The Rational And Dilemma Of Shareholder Voting Rights

The principle of one share one vote and the capital majority rule have legally recognized the theory that residual rights of control should correspond to residual claims,which also indicates that any person who intends to control the company had to increase his or her investment in the company.As to the listed corporations whose shares are publicly traded in our country,the threat of “Barbarians” generally leads to the existing of majority shareholder(s)who can fully control the company individually or collectively.Thereof,most minority shareholders are unable or unwilling to even influence the company due to their small holdings of shares in the company.Minority shareholders are more likely to choose “rational apathy” with no incentive to exercise the right of control based on economic force arising from their residual claims.Thus,the achievement of shareholders' residual claims is harder than what legislators have expected.As a result,the function of shares has involved into two aspects,the interest of control and the interest of economy.While majority shareholders would like to expand their holdings of shares in the company in order to earn the interest of control,which is in accord with the rationales of voting rights,minority shareholders are only interested in the short-term returns of target company,focusing on the share price.Therefore,the theory that residual right of control should correspond to residual claims cannot explain the behavior of the purchase of shares by minority shareholders.The voting right is no longer valuable for minority shareholders in practice,leading to the state of control vacuum.Of course,this dissertation is not intending to criticize the majority shareholders who control the company,nor emphasizing the restrict of majority shareholders' grab of interests of minority shareholders and company through the activation of voting rights holding by minority shareholders.According to the data hereinafter set forth,there is a large part of voting rights has been lying by,which means that the value of those voting rights has not been fully utilized for the company.For this reason,this dissertation will analyze the separation between right to vote and right to income in public companies in China,discussing whether the voting rights of minority shareholders that have not been effectivelyused could be activated through the introduction and innovation of legal regime.Now therefore,this dissertation is based on literatures before April 2017.The rest of it is developed as follows: Part I outlines the rationale of voting rights offered to shareholders of company and why only this group of members owns the right to vote.Part II tests the dilemma of voting rights in practice,especially for corporations whose shares are publicly traded on capital market in China.Part III explores the possibility of the activation of minority shareholders' voting rights in China.Part IV suggests several methods that might be adopted in our country for the activation of those voting rights.