Protection Of Minority Stockholders' Equity In Stock Company

Building modern corporate system is the target of the reform of State enterprises and the objective requirements of market economy. At present, company of limited liability and joint-stock company limited, as typical forms of modern corporate system, have developed well in China, taking a decisive position in the country's economic life. Nevertheless, the country's securities markets are not normalized, leading to minority stockholders' equity infringed time and again, a problem of allow of no evasion. In view of this situation, this article tries to put forward, based on relevant theoretical basis of legal protection of minority stockholders' equity, starting from protective forms and countermeasures and through comparisons of relevant laws of other countries, correct attitude toward the problem and measures to be taken to solve the problem. This article makes systematic exposition in five aspects as follows:A summary of minority stockholders' equity. In this chapter the author expounds the concept of stockholders' equity and its content. Meanwhile the author also expounds that the principle of most capital decision may be abused. So it is necessary to give the minority stockholders' fully protection in system.Theoretic basis for protection of minority stockholders' equity The author expounds that protection of minority stockholders' equity is the principle of equality among stock holders, a requirement for realizing corporate value target, establishment of the core position of the board of directors and the faith duty of the directors to minority stockholders, faith duty of corporate predominant stockholders to minority stockholders, and establishment of the principle of effectiveness of corporate ultra vires act. Phenomena of infringement of minority stockholders' equity existing currently in stock companies and their reasons In this chapter, the author analyses infringements of minority stockholders' equity existing currently in the country's securities markets, enumerates seven infringements, and seeks seven reasons for the infringements from the country's current systems.On the basis of the analysis of theoretical basis of protection of minority stockholder's equity and the phenomena of infringement of minority stockholders' equity currently existing in China and their reasons, starting from the study of relevant regulations on legal protection of minority stockholder's equity provided in other countries, the author proposes perfection in legislation in the aspects of cumulative voting, fiduciary duty of directors to minority stockholders and stockholders' derivative suits. In view of legislation in cumulative voting performed in other countries and difference in views in this respect in academic circles, the author thinks it is necessary to introduce the system to protect investors' investment enthusiasm and legitimate rights and interests and to realize material equity of the voting right because the establishment of corporate system is still at its starting stage in the country and the fiduciary duty of directors has not been established in real meanings. In the respect of the fiduciary duty of directors to company and minority stockholders, the author analyses imperfections in legislation in the country, makes comparisons among regulations of other countries, and proposes further intensifying of the fulfillment of directors' duty of management in good faith and loyalty duty to stockholders.At last, In the respect of institution right of stockholders' derivative suits, the author studies, through comparison, relevant systems carried out in various countries, expounds significance of setting up the derivative action system in the country, and proposes that the system to be devised encourage institution of derivative suits by minority stockholders to protect the interests of the company, minority stockholders and creditors and that appropriate restriction on institution of derivative suits by minority stockholders be made in the system so as to give considerat...