Rights Restricted Problem Between Controlling Shareholders And The Board Of Directors

The control right in listed companies has been a significant legal issue in listed companies’ corporate governance in China. The issue becomes a key point of the governance of listed companies that how to deploy the control right among the shareholders, the board of directors and the managers in order to achieve a balance. Since the equity ownership structure in the Chinese listed companies is usually centralized and due to the equity ownership the controlling shareholders intend to make excessive intervention to the company, which hinders the ordinary operation of the board of directors and trespasses the right and interest of the listed company and other investors. Therefore, for a more reasonable corporate governance of listed companies, it’s of significant meaning to study on the topic of the right constrain between the controlling shareholders and the board of directors.The author tries to start from the research on the relationship between the controlling shareholders and the board of directors, and explores the right boundary between the two through the process of the company’s operation, and analyzes the performance and reasons of the imbalance of the control right in listed companies caused by that boundary. Meanwhile, the author provides advice on the issues that how to improve the right constrains between the two and perfect the structure of governance of listed companies.Except the Introduction and the Conclusion, this paper includes three chapters as the following:In chapter one the author introduced the current status of the boundary of right between the controlling shareholders and the board of directors in listed companies in China. First, the relationship between the controlling shareholders and the board-of directors is discussed; second, the current delineation of authority between the general meeting of shareholders and the board of directors in China is described; last, the major restriction that regulates the right of both the controlling shareholders and the board of directors in China is expounded.In chapter two the author discusses the imbalance of the right constrains between the controlling shareholders and the board of directors in listed companies in China and analyzes the reasons. First, the author described this imbalance from the perspective that the boards of directors of listed companies lack independence; second the author expounds the status that the controlling right is abused by the shareholders who own it; last, the author analyzes the major reasons that cause this imbalance, which mainly include the over-cross authority of the general meeting of shareholders and the lame right constrains system.Chapter three deals with the topic that how to improve the right constrains between the controlling shareholders and the board of directors. The author provides advice from three aspects to change the imbalance of the right constrains of the controlling shareholders and the board of directors in listed companies’ corporate governance. Fist, the author advices to adjust the right boundary between the general meeting of shareholders and the board of directors properly, including to weaken the authority of the general meeting of shareholders; second, the author proposes that the supervision and regulation to the controlling shareholders could be more strict; last the author advices to adjust the extent of the inner control to the board of the directors in order to enhance its control right in listed companies.