Private Benefits Of Control And Minority Shareholders' Rights To Participate In Decision-making

A large number statistical results show that the shareholding distribution of listed companies in most countries and regions in the world including china is extremely unbalanced.A large number of shares are concentrated in a minority or one shareholder,meaning concentration of rights.Because of this concentration,it provides the breeding ground for the emergence of private right of control to obtain private interests by using their rights.The lack of the rights of minority shareholders to participate in decision-making and supervision are the power basis for private benefits of control.As the most direct form of protecting the interests of minority shareholders,the articles of association is a favorable mechanism for minority shareholders to protect themselves.In recent years,more and more investors are using the relevant provisions of the articles of association to safeguard their rights.In this context,this paper,starting from the micro perspective,investigates whether the guarantee of the participation of minority shareholders in decision-making right has an inhibitory effect on the private benefits of control of major shareholders.Using the data of private listed companies of china from 2013 to 2016,this paper analyses the impact of the cumulative voting rights and the special decision terms on private benefits of control in the company's articles of association,which reflect the protection of the minority shareholders' participation in decision-making rights,which are not yet mandatory and can be decided by the shareholders of the listed company.The following conclusions can be drawn from the analysis:that is,the fewer private benefits of control behaviors occur in listed companies that establish the cumulative voting system in the constitution;The more special decisions in the charter,the less the private benefits of control;The higher the guarantee for minority shareholders to participate in decision-making power(That means,in the articles of association both have the cumulative voting system and more than 6 legal matters of special decision),the less the private benefits of control behaviors will occur.The study of this paper has certain theoretical and practical significance.First,we verify the protection of law on the rights of minority shareholders from the perspective of the listed company's articles of association,enrich the influencing factors that restrict the abuse of the rights of major shareholders,and enrich the research in the field of"Financial and Law".Second,it helps us to increase our understanding of the cumulative voting system and special decisions.It will provides data and theoretical support to regulators and companies' shareholders in order to force companies to adopt the cumulative voting system and increase the types of matters in the company's articles of association that require special resolutions of shareholders' meetings.Finally,it is beneficial to improve the corporate governance,reduces the agency cost,enhances the communication with the small and medium shareholders,prevents the company from being hollowed out and improves the value of the company.