Research On The Avoidance System Of Directors’ Voting Rights

Voting right is the legal right enjoyed by directors.By participating in the resolutions of the board of directors and voting fairly and objectively,directors can perform their own management and decision-making duties,and achieve the value goal of promoting the development of the company.When there is a conflict of interest between the directors and the company on a resolution,the elimination of their voting rights becomes an effective measure to improve the legitimacy of the resolution,and the voting avoidance system of directors is established based on this need.At present,with its excellent regulatory function,the system has been recognized and applied by many countries in the world.China first introduced the system into the Company Law in 2005,which is a big step forward in legislation.However,there are still some defects in the current company law,which cause many problems in practice.In terms of application,the provisions based on the existence of "related relationship" are not accurate enough to cover all situations that directors need to avoid.At the same time,the legal subject of avoidance is limited to the directors of listed companies,and the scope is too narrow.Due to the uneven governance ability between companies,it is possible that the restriction mechanism will be limited or even absent if the problems avoided by the directors of non listed companies are completely regulated by the articles of association,which makes it possible for the autonomy of the articles of association to be alienated into the autocracy of major shareholders and "insiders" Directors.In addition,although shareholders have the legal right to file a cancellation action against the defective resolution of the board of directors,shareholders and directors can also request the court to confirm the invalidity or non establishment of the resolution of the board of directors.When the interested director does not withdraw,how should the court determine the effectiveness of the resolution? There is no clear guidance in the law,and there are many disputes in the substantive decision.In 2016,the "dispute over denominator" incident of the board of directors of Vanke highlighted the abstraction and emptiness of the system legislation in terms of entity and procedural rules.However,combing the relevant cases and literature in China,the practical and theoretical circles have not formed a reasonable and effective solution to the above problems.The substantive rules,operation procedures and adjudication issues of the system need to be clarified.In order to improve the director’s voting avoidance system in China,it summarizes the practical problems reflected in the rulings and combines the advanced legislative experience of extraterritorial countries and other regions represented by the United States.This article believes that the system cannot be based on existing conditions in terms of applicable conditions."Relationships" are the basis for judgment,and the expansion of the applicable situation should be interpreted as "interests" where directors and resolutions have conflicts of interest with the company,and a review process should be established to match them.After the directors are required to disclose their own interests,the board of directors will judge whether their voting behavior will harm the interests of the company,and then decide whether to avoid.In terms of the scope of application subject,it should not be limited to the directors of listed companies,but should be extended to all the directors in the form of companies,so as to avoid that when the system is omitted from the articles of association of non listed companies,shareholders and directors can not remedy the rights infringed by the interested directors without the express provisions of the law.At the same time,in terms of the setting of the rights of the excluded voting directors,we can refer to the common laws of various countries and allow the regulated directors to attend the board meeting as nonvoting delegates,but we should make clear the base number that can’t be included in the number of voting.In addition,the specific procedures of the system should be specified in detail,and the start-up and operation of the procedures should include the specific process of application,notification,review and identification as well as publicity.When the interested directors do not evade and participate in the resolution of the board of directors,non-interested directors and shareholders can only recover losses through ex post accountability after unsuccessful internal negotiations.In order to give full play to the final relief function of the litigation,it is necessary to allocate the burden of proof reasonably.When the interested directors apply for withdrawal actively,the applicant should provide effective evidence of their own interests to prevent malicious application and wrong application.When others apply for withdrawal of directors,the inversion rule of burden of proof should be introduced,and the director to be applied should prove that the withdrawal reason does not exist.At the same time,in order to determine the effectiveness of the resolution,the court should reasonably match the severity of "illegal voting procedures" with different means of relief.When a resolution can still be passed after a director does not withdraw but his voting right is excluded,the "minor flaw maintenance principle" can be generally applied to determine the validity of the resolution;when the resolution cannot be passed after the voting right of the interested director is excluded,but his action of not withdrawing the voting right does not seriously damage the interests of other subjects,the right of shareholders to petition for cancellation of the resolution is sufficient to protect their interests;for example: If the degree of "procedural violation" of directors’ behavior has reached the level of "content violation",and seriously infringes the interests of other subjects,the court shall hold that the resolution is not tenable.