Improvement Of My Country’s Cumulative Voting System

How to effectively protect the interests of small and medium shareholders is a subject of corporate governance,the European and American company law has developed a special mechanism of cumulative voting system,China’s 2005“Company Law”is also introduced in Article 106(now Article 105 of the“Company Law”).However,in recent decades,cumulative voting system has gradually declined outside the region,and its value functions have been replaced or eliminated by other systems.Against this background,where will our cumulative voting system go? In this regard,it is necessary to conduct an in-depth analysis of the future of cumulative voting rights.In addition to the introduction,the main text of this article starts from the following four parts:The first part,improve the legitimacy of the cumulative voting system.First of all,through empirical analysis,it can be seen that the cumulative voting system is rarely applied by incorporated companies and limited liability companies,and even when electing directors and supervisors,it is difficult for small and medium shareholders to apply the cumulative voting system to select their favorite director and supervisor representatives.By analyzing the cumulative voting system,it can be seen that there are defects in the system design,and the interests of small and medium shareholders cannot be properly protected.Secondly,from the perspectives of due and actual,the cumulative voting system has practical effects on protecting the interests of small and medium shareholders,and compared with other systems that protects the interests of small and medium shareholders,it is more reasonable and effective,improve the cumulative voting system is sufficiency and necessity.Finally,it is feasible to perfect the cumulative voting system: first,the cost of perfecting the rule is low;second,perfecting the rule will not have an impact on other company systems and company operations.The second part,the expansion of the scope of application of the cumulative voting system,that is recommended to extend its scope of application to limited liability companies with more than two people.One is because the limited liability company with more than two people has the need to apply the cumulative voting system.Since one-person companies have only one shareholder,there is no need to apply the cumulative voting system.In a limited liability company with more than two people,the concentration of equity is high,the equity liquidity is relatively low,the number of shareholders is relatively small and the personnel is relatively fixed,in the practice limited liability companies are more prone to situations where large shareholders infringe the interests of small and medium shareholders,and there is an urgent practical need for small and medium shareholders to cumulate voting rules.Second,there are no institutional and legal obstacles to the operation of cumulative voting system in limited liability companies.It should be noted that when the cumulative voting system is applied,the cumulative voting rights owned by shareholders of a limited liability company are the product of the shareholder’s contribution ratio and the number of directors and supervisors to be elected,there is no essential difference between the calculation method of cumulative voting rights of the incorporated company.The third part,mandatory application of the cumulative voting system,that is,it is recommended that the joint stock limited company and two or more limited liability companies apply the cumulative voting system compulsorily.If the cumulative voting system is arbitrarily applied in accordance with the company’s articles of association or the shareholders’ resolution,the consideration of the controlling shareholder’s own interests will often prevent the cumulative voting system from being appled,which makes the application of cumulative voting system formal.Since the alternative system of cumulative voting system is not mature in China and lacks a market restraint mechanism,only the mandatory application of cumulative voting system can protect the interests of small and medium shareholders.The mandatory application of cumulative voting system will not affect the company’s operational efficiency,in the practice,the universality,convenience,and operability of cumulative voting system can be improved by promoting the cumulative voting intention notice,voting rights collection,voting rights agency,and online voting,which improve the company’s operational efficiency.In addition,the disputes between the factions of shareholders can be resolved by imposing loyal and diligent obligations on directors and supervisors.The fourth part,the third way to improve the cumulative voting system is to suggest that the directors and supervisors should be elected jointly.The combined election refers to the election of directors,at the same time,the election of supervisors should be held jointly with the elected supervisors.Each share has the same number of voting rights as the directors and supervisors to be elected,the voting rights owned by shareholders can be used collectively,and those with more votes are elected as directors or supervisors in sequence.The combined election of directors and supervisors not only helps protect the interests of small and medium shareholders,but also helps maintain the independence of supervisors.In the combined election of directors and supervisors,there are two modes for determining the positions elected by more votes: the first mode is to determine the total number of candidates in the order of how many candidates get votes,and then by the order choose the director or supervisor themselves;the second mode is to clarify the candidate’s role before voting,count the number of votes for director candidates and supervisor candidates respectively after voting,directors and supervisors are elected in order.The two models have their own advantages,no absolute advantages and disadvantages,the company can freely choose which model to apply according to its actual situation.