The Law Perspective Of Institutional Investor Participation In Corporate Governance

With the freedom of China’s capital market will gradually open up the marketparticipants gradually increased, and the gradual improvement of market efficiency,institutional investors have become involved in an emerging market economy forces.In particular, participation in corporate governance as an important force, and maturecapital market economy, they are still in the development stage of the process ofexploration.. This article outset clear concept and composition of institutionalinvestors, Describe legal perspective to institutional investors outside of listedcompanies is the basic form of governance model, Positivist analysis method used byinstitutional investors "rational hypothesis","irrational choices" and "limited reality"three kinds of market behavior to carry out legal research, Institutional investors useeconomic principles representations based on the "limited nature of reality," thebehavior of a "short-sighted","herding","disposition effect" and "illegal acts" fouracts alienation. China’s "Company Law" rights and obligations of shareholders oflisted companies on the relevant provisions set forth in the listing of institutionalinvestors in corporate governance, the rights and obligations should be, Compare thehistorical analysis of domestic and foreign institutional investors, legal environmentchanges, analysis of institutional investors involved in corporate governance legaldifficulties encountered, and from the institutional investors access system, exitmechanism and put forward a sound legal and regulatory institutions in three areasinvestors to participate in the legal system of corporate governance recommendations.As the market behavior of institutional investors to engage them in alienationprocess of corporate governance is not only the shareholders can not effectively playan active role, and on external markets and social welfare will have more seriousnegative impact. Eligibility for institutional investors should be encouraged to enterthe market in line with the attitude to enrich an effective participant in the market andincrease market efficiency, and through a reasonable and adequate competition,promote market discipline effect of the play. The other hand, institutional investors out of the market mechanism, we must adopt a more stringent exit mechanisms, theestablishment of relatively standardized control over trading market, withoutincreasing the exit costs under the premise of normative investment behavior ofinstitutional investors, prompting the agency investors to shift investment philosophy,to curb short-sighted behavior, encourage and guide the investment value of listedcompanies. Meanwhile, to encourage institutional investors to participate inrepresentative action, through legislation establishing investor group litigationsystem, by strengthening of institutional investors and intermediaries tradingbehavior of regulatory and institutional investors practitioners fiduciary duty toimprove the information disclosure system, the establishment of punitive damagesand civil penalties measures to establish a securities arbitration system to enhance theprofessionalism and efficiency of justice, to further improve the securities civilcompensation system.