The Dilemma Of Shareholder Proposal System’s Application In Corporate Governance:Case And Inspiration

Chinese capital market has mushroomed and achieved excellent development performance since its establishment. However, the interests of minority shareholders have been usually expropriated in recent years. Under the circumstances, principal-agent problems and protecting minority investors are increasingly brought to the attention of the academia and relevant regulatory departments. Internal and external corporate governance mechanism protect the interests of the minority shareholders from different aspects. As the main stakeholders, the governance effect of minority shareholders themselves should not be ignored. As a result, Chinese "company law" formally established the system of shareholder proposal in2005. Minority shareholders have been given the rights of participating in corporate governance since then.Different from those countries which have developed mature capital markets, the shareholder proposal rule in China has been set up only for a few years. Therefore, our related researches are mainly focused on the aspect of rule comparison and revelation and not involved in its practical application. This paper is aimed to explore the difficulties in its process of application through typical case study of minority shareholders’applying shareholder proposal to participate in corporate governance and protect their own interests, and then puts forward relevant advices. It may enrich the research contents and methods, and has strong practical significance as well.This paper is divided into five parts and organized as follow: Firstly, the author introduces the related concepts, domestic and overseas research status of shareholder proposal as well; Secondly, related theories are summarized, including principal-agent theory and investor protection theory; Thirdly, the author introduces system development of shareholder proposal, and analyzes application status combining with the statistical data; Fourthly, on the basis of both theory and system, this paper has chosen two typical listed company under different equity structure as the concrete analysis object, and analyzes the difficulties in application from the aspects of proposals’formation, the causes and forms of obstruction, and the stock market reaction to it. This paper tries to find whether shareholder proposal system is an efficient way to protect the minority shareholders’ interests and improve the level of corporate governance; Finally, based on the analysis, this paper makes suggestions and summarizes the limitations of this study.