Analyzing The Legal Institution Of Creditors' Participating In Corporate Governance

The stakeholder theory breaks Shareholder Paramount of the traditional corporate governance and it believes shareholder is not the only subject of corporate governance. The subjects of corporate governance are all stakeholders including shareholders and creditors and so on. The creditors become primary stakeholders by their important and legal claims on the company. On the basic of stakeholder theory, the creditors are entitled to participate in the corporate governance. This thesis will be discussed in four parts on the issue of creditors'participating in the corporate governance.The first part is the basic theory of a creditor taking part in the corporate governance, which is the foundation of the thesis. First,the writer expounds the theory basis of and the necessity of the creditors taking part in the corporate governance taking part in the. Stakeholder theory think that a company is not only the possession of a shareholder himself but also the investment and involving of every stakeholder who bears the risk of the run of the company,so the management of company is not only to the shareholders, the benefit of the stakeholders should be taken account in,they also have the right to take part in or effect the corporate governance. The creditors being the important stakeholders also have the right to take part in the governance so stakeholder theory supply the theory basis for creditor taking part in the corporate governance. Creditors taking part in corporate governance has a positive significance. The creditors taking part in the corporate governance is helpful to perfect inner supervision system,to lower agent cost effectively,to protect creditor's benefits,to realize the company's result in the long term. Second,the writer expounds the necessity of the creditors taking part in the corporate governance in our country. The creditors are not outsiders,the full realization of creditor's rights is based on the maintaining and increasing the total assets of the company. And the creditors are the same as other investors to get the benefit of investment, so the creditors have the motivation to pay attention to the management of the company which is the same as the shareholders. Nowadays the company is difficult to meet the need of development if only rely on his own capital, the creditors play more and more important role in the process of the development of the company. But"shareholder value and creditors indifferent"is difficult to breakthrough. So it is necessary to find out a new way to protect the creditors in advance and positively.The second part is the international comparison of the mode of creditors'participating in corporate governance. There are the positive mode and the negative mode for creditors to take part in corporate governance. The positive mode is that creditors participate directly into the daily operation of corporations, such as the almighty bank in Germany and sponsored by the bank in Japan and Bondholders Meeting. The negative mode is that creditors don't participate directly into the daily operation of corporations but they can investigate the legal responsibility of the company or controllers according to relative system through legal procedures, so that they can supervise the company or controller, such as firewall system in American bank and the Lutheran obligation of directors to creditors.The third part is current legislation situation and shortcomings of creditors'taking part in the corporate governance in China. Law circle have no systematic and comprehensive research results for the topic of creditors taking part in the corporate governance and just general and supplementary research. The new Corporation Law is the typical shareholders'sovereignty mode, which includes few system design for corporation staff, creditors and other stakeholders participating in corporation governance. Code of Corporate Governance for Listed Companies offers the platform for stakeholders participating in corporation governance, but the Code is still centered on shareholders interests, not breaking away from the limitations of Corporation Law. The new Bankrupt Law stipulates that the creditors can participate in the corporation governance through the creditors conference, the creditors committee, but many resolutions are judged by Courts finally, meantime many stipulations are far too in principle and ambiguous, not really applicable, therefore less being effective to assure the realization of the right of creditors governance. Host Banks Administration Temporary Measures aims to strengthen the relationship between banks and enterprises, not to encourage the banks participating in corporation governance. To speak in summary, though our country accepts the theory of stakeholders participating in corporation governance, the stipulations of creditors participating in corporation governance are not deep, not specifying profoundly how the creditors participate, as well as the participating patterns and ranges, leading to some provisions are too in principle, less being able to manipulates, not providing an effective way for creditors participating in corporation governance.The forth part discusses the legislation proposal of creditors'participating in corporation governance in China. The design of the path of creditors participating in corporate governance is made differently according to the creditors of financial transactions and the creditors of non-financial transactions. The creditors of financial transactions have more power and motivation to participate in the company management than the creditors of non-financial transactions, so in the way of corporate governance they should adopt positive mode, banks with creditors identity enter the board of supervisors to participate in the company management, debenture holders through the bondholders meeting exercise their voting rights to important matters of the company, at the same time creditors derived litigation system should be introduced. For the creditors of non-financial transactions we can design the passive way in corporate governance, through the design of director of Lutheran obligations to creditors, expanding compulsory subject of the compulsory public information make the creditors base on the system design through legal procedures investigate company management or control of legal responsibility to achieve the supervision the company management, which is an effective form to participate in the company management. Of course, capital creditors also apply director of Lutheran obligations to creditors, expanding compulsory subjects of the compulsory public information.