The Subject Qualification Of Proxy Solicitation

Restricting the subject of proxy solicitation is one of the ways to limit the abuse of voting rights by shareholders.The establishment of the voting rights solicitation(proxy solicitation)system is based on the true nature of the rational economic person of the commercial subject,based on the fact that the private interests of the shareholders are inconsistent with the overall interests of the company,and incorporates the concept of substantive equality in the company law,which is to prevent major shareholders from abusing of the principle of capital majority decision,and to realize the embodiment of controlling shareholders' duty of good faith.At present,China's law sets a relative limit on the scope of the solicitors preventing the personal interests of individuals from detracting from the overall interests of the company,and to adjust the proportion of voting that the shareholders are unbalanced in determining the major events of the company,and indirectly to protect the interests of the minority shareholders.However,there are also views that the starting point for the soliciting voting rights is to safeguard the interests of small and medium shareholders and to provide them with institutional weapons that they can constitute a joint voice to fight against the controlling status of major shareholders.The limitation of the voting rights of shareholders can only be applied in cases where there is an interest specified by law.Similarly,a certain degree of restriction on the subject qualification of proxy solicitation is a relative and temporary restriction.The study ofthe subject qualification under the existing regulations will contribute to the further construction and improvement of the system.After a basic analysis of the reasons for restricting the subject qualification of voting rights proxy,this paper believes that the legislators should follow the principle of information disclosure and fair competition,and then make further restrictions on the two types of the soliciting subjects which have been specified by current law(i.e.,the shareholder collectors and the management collectors)to implement the proxy solicitation activities.This paper believes that the restrictions on the qualification of the soliciting subject should be classified and discussed separately.Since the controlling shareholder assumes the obligation of good faith,while it is undoubtedly entitled to the enjoy the qualification of proxy solicitation,it should fulfill its fiduciary duty as the precondition of its legal subject qualification,especially in the company's acquisition transactions,its reasonable investigation and the disclosure of material information to the company and the solicited shareholders are prerequisites for the proxy solicitation activities.In addition,by drawing on the restrictions on voting rights,especially the relative restrictions in other countries and regions,it is recommended that the controlling shareholder who is proposed to collect more voting rights should be set higher shareholding requirements in order to regulate their voting rights,preventing the misappropriation of the company's interests and the damage of minority shareholders' interest.For non-controlling shareholders,especially for small and medium-sized shareholders,due to the existence of rational apathy and China's currently encouragement of small and medium-sized shareholders to actively participate in corporate governance(i.e.,specialized China Securities Investor Services Center for the negative phenomenon of small and medium shareholders),it is recommended that the company shall not to further limit the holding period after the law specified that minimum shareholding ratio shall not be proposed.For the proxy solicitation of the board of directors and independent directors,as the fiduciary duty which comes from their identity of the trustee of the company is originally borne,we can learn from the provisions of the voting rightsexclusion system and the provision in the Article 124 of the Company Law which states the avoidance of the voting of related transactions from directors of listed companies,and make efforts to establish the connection between the subject qualification and the items which are to be reviewed in the shareholders' meeting.Hence,it is suggested to restrict such subjects from solicitation for matters which are directly related to their own interests.