Research On The Protection System Of Corporate Control Right Of Founder Shareholders In China

Corporate control is the core and key of corporate governance.Mastering corporate control means that it can directly or indirectly determine the decision-making of corporate affairs.Therefore,it is object contested by various stakeholders.Essentially,the influence of corporate control comes from the voting rights brought by equity.The higher the shareholding ratio,the higher the 'voting power of the representative,and it is easier to achieve the control of the company s strategy,operation and personnel arrangement.At the beginning of the establishment of a company,founder shareholders hold the control of the company based on their shares and personal characteristics.However,with the development and growth of the company,the company is increasingly demanding financing,resulting in the dilution of the equity of founder shareholders by external funds constantly,which easily leads to the competition for corporate control between investors and founder shareholders.In recent years,such phenomena have occurred frequently in China,which has brought many negative effects on company development and market management.Nevertheless,China's "Company Law"and others have not made any direct provisions on the corporate control of founder shareholders,not to mention the protection provisions.Based on this,for founder shareholders,what can be done is seeking self-help.They made agreements in the memorandum of association,which legitimacy remains to be considered or chose overseas listing because of the protection system,which has brought adverse consequences to the corporate governance and development of our country as well as to the maintenance of our capital.From the perspective of founder shareholders,their innovative spirit and ability,management level and ability,and long-term emotional sustenance have proved that they are more suitable for the development of the company than external investors.The company's dependence on the human capital of the founder shareholders also drives the company to strengthen the protection of corporate control right under the spirit of autonomy by means of the autonomy of the articles of association.This is also a positive response to the call for "mass entrepreneurship and innovation" policy,which is conducive to protecting national innovation and stimulating the entrepreneurial passion of more potential entrepreneurs.At the same time,the founder shareholders utilize their own personal abilities and good reputation to continuously win the trust and support of internal and external personnel in the process of corporate governance,which accumulates more dedicated social capital for the company.By protecting the founder shareholders' corporate control right,these social capitals can work effectively and maintain the stable development of the company.In addition founder shareholders know more about the company's development status than the outsiders,and making future development strategies for the company more actively.Meanwhile,they implement the strategic planning faster with improving the efficiency of company decision-making and preventing external investors from hindering the company's sustainable and stable development for short-term interests through making use of personal social capitals.Therefore,China should attach importance to and focus on the establishment of founder shareholder's protection system of corporate control rights.In the process of constructing the protection system of the founder shareholders'corporate control right in China,the following aspects should be accomplished:Firstly,it is the direction to clarify the basic principles that should be followed in the construction of the control right system of founder shareholders.Based on the lack of protection system in Chinese laws and regulations,the diversity of relevant stakeholders and institutional design,the system construction should always follow the principles of corporate autonomy,balance of interests and institutional competition,and give play to the subjective initiative of the company and its participants.It can balance the interests of all parties and choose the protection system that is most suitable for the company while protecting corporate control right of founder shareholders,thus reducing the agency costs.Secondly,we should actively explore and learn from the positive experience of the overseas founder shareholders protection system,combine with the actual needs of the protection of the corporate control right of the founder shareholders in our country,then rationally design the specific measures for ours,such as the Dual Class Share System,the Partnership System and other protection modes.Finally,we should set up a supporting system for the protection of the corporate control right of Founder shareholders as soon as possible,including giving full play to the social capital utility of founder shareholders.improving the individual ability of founder shareholders and preventing the abuse of the control rights of founder shareholders.While strengthening the corporate control right of founder shareholders,the risk of abuse of rights should be reduced from the source.