On The Particularity Of The Limited Liability Of Corporate Governance And Its Legal Regulation

Limited company is one of the two legal company forms prescribed by Company Law of China.Chapterâ…¡of Companies Act 2005 makes comprehensive prescription in respect of limited companies the governance of which reflects high level of flexibility,where the companies' autonomy power has been considerably respected.However,in comparison with the companies acts of the western countries,the distinction between limited companies and stock companies in governance regulations of our country has not been so obvious.The rules in respect of limited companies' governance fail to reflect flexibility,uniqueness and autonomy,especially the characteristics of governance of a private company,and fail to satisfy the unique needs from small-and-medium sized companies.Thus,it is in high demand to pay full attention to the particularity of limited companies governance.This paper comprises three parts:introduction,main text,and conclusion.The main text is divided into three chapters.The introduction describes some of the major reasons for this subject and its research value.The first chapter of the main text elaborates the legal basis of corporate governance's characteristics of limited companies.First of all, beginning with the general theory of corporate governance,the chapter introduces the concept of corporate governance and its foundation,the principal-agent hypothesis,and argues that the general principal-agent problem as a source for problems of corporate governance doesn't exist in a limited company.The limited company has its special agent problem which is between the minority shareholders and majority shareholders of a company,so it is necessary to make different treatment.The chapter then, starting with the concept and the characteristics of limited company,makes it clear that the high degree of unity of ownership and management,the closely-held feature,the aim for the small-and-medium sized enterprises, and the strong adaptability are the basic characteristics of a limited company.The chapter finally discussed the unique governance of limited companies which has five apparent features:the first is a strong degree of autonomy and flexibility;the second is the low-cost of corporate governance;the third is the fact that minority shareholders are vulnerable to fraud and overruling;the fourth is the difficulty for minority shareholders to quit the company;the fifth is that company's personality is more vulnerable to be denied.The second part of the main text introduces several features of limited companies' governance regime in oversea countries and regions,carries out a comparative analysis,and prospects the trend of corporation convergence regulations,with a hope to give some reference value for the refinement of our system of governance regime for limited companies.The third part of the main text gives an analysis for the characteristics of governance of limited companies in our country.First,this part discusses the historical change of the government of limited companies in our country;second,it analyses the unique traits appeared in companies' legislation in our country in respect of corporate in limited companies.This part then followed by the main principles for the refinement of corporate governance for limited companies,including the nature of governance norms,transaction costs and efficiency,the balance of interests,the distinction and adaptation to the unique characteristics of small-and-medium sized firms.At last,this part provides some propositions for improving the corporate governance regime for limited companies in the company law of our country.This article concludes with the stands of the author,and gives a description for the thoughts and method in writing this article.