The Dilemma And The Way Out Of Exercising The Voting Rights Of Financing Shareholders In The Margin Trading System

The trust system in the Margin Trading system has been officially implemented for 12 years in China.Since its introduction,the trust system in the Margin Trading system has been questioned by the theoretical community,under the support of the trust system,the financing securities become trust property,and their ownership is separated from the investors,while the securities company as the nominal registrant is registered in the shareholders’ books,which also leads to the investors as the actual contributors,but can not personally implement the shareholders’ rights,and all rights are exercised by sending requests to the securities company.All rights are exercised by sending a request to the securities company,which will exercise them.Therefore,in practice,this has led to the dilemma that the financing shareholders’ equity,especially the voting rights,are difficult to exercise and their rights and interests cannot be protected.This paper attempts to analyze and sort out the basic framework of the legal system related to financing and securities financing business in China,use comparative studies and case studies to find out the problems and unreasonable points,and make suggestions to solve the problem of difficulties in exercising the voting rights of financing shareholders in China.The paper firstly compares the current problems of difficulties in exercising the voting rights of financing shareholders through the case of AICG’s prevention of onsite voting by financing shareholders,and concludes through the case study that the Margin Trading system in China is not yet perfect,and the trust system introduced is not only in conflict with the existing trust theory in China,but also not conducive to the smooth exercise of the voting rights of financing shareholders,mainly in the following aspects: firstly,in terms of the security system of Margin Trading,China adopts the trust system to guarantee the voting rights of financing shareholders.Firstly,China adopts the trust theory for the guarantee system of Margin Trading securities,but the current common practice of securities companies to entrust the exercise of voting rights to financing shareholders is single time,which is contrary to the trust theory,and under the common practice,the cost of exercising the voting rights of financing shareholders increases,the procedure of requesting securities companies to exercise voting rights as nominal shareholders is cumbersome,the access to information of shareholders’ meeting is not smooth,and the securities companies are not active under the indirect holding mode.The paper also introduces the current theoretical debate on the issue.This paper also introduces two other popular theoretical doctrines on the guarantee system of Margin Trading,i.e.,the maximum pledge theory and the cession guarantee theory,which are explained and refuted,and argues that both doctrines cannot well solve the problems of guaranteeing Margin Trading and the difficulties in exercising the voting rights of financing shareholders.Secondly,the equity holding model of Margin Trading is a typical indirect holding model.This paper introduces the five major indirect holding models in foreign countries and concludes that the individual ownership model and the joint ownership model allow the financing shareholders to exercise their equity directly,but cannot guarantee the claims of the securities company,and the contract model cannot achieve the corresponding purpose for both.The trust model is the model used in China’s current Margin Trading system.The securities interest model is able to get rid of the traditional theories and solve the theoretical dilemma arising from the guaranteed issue,and can flexibly deal with the exercise of financing shareholders’ equity through the formulation and modification of the terms.Finally,this paper argues that the securities equity model should be introduced into China’s Margin Trading system,and the difficulties in the exercise of voting rights should be solved under the securities equity model,specifically by: firstly,improving the notification system for shareholders’ meetings,mobilizing the issuers and securities companies,and establishing a direct notification system for the issuers’ securities companies to the financing shareholders;secondly,making the use of voting rights proxy mandatory in the Margin Trading system,and putting Secondly,the voting rights proxy should be made mandatory in the Margin Trading system,and the voting rights attached to the securities as security should be authorized to be exercised by the financing shareholders on a long-term basis,so as to simplify the process of voting by the financing shareholders;thirdly,the cost-sharing system for the exercise of voting rights should be optimized,and the payment system of "whoever uses,whoever bears" should be established,so as to reduce the cost of exercising the voting rights by the financing shareholders.