Abuse Of Capital Majority Decision And Legal Regulation

A company is a typical corporation for profit.Because of its capital combination,the number of shareholders’ voting rights directly depends on their shares or investment proportion.Accordingly,the basic principle of the company’s deliberation system should be based on the consistency of the return on investment and the risk-taking system.The voting mechanism of the company has experienced the development from "consensus" to "capital majority",which contains the legal value of democracy,equality and efficiency,and the social value of encouraging shareholders’ investment,harmonizing shareholders’ interests and improving operation efficiency.This makes it a voting mechanism universally recognized by the company law at present,and its establishment has profound theoretical basis and practical significance.However,most of the capital has its inherent defects.Because there are differences in interest orientation between the company and shareholders,and between shareholders and shareholders.Moreover,the major shareholders enjoy more "discourse power" in the company according to the capital advantage,which makes the major shareholders ignore the reasonable expectation of the company and the small and medium shareholders and pursue the maximization of their own various interests.At this time,the majority of capital has become a tool for them to make private profits,resulting in the abuse of the majority of capital.The development of China’s corporate system started late,and all aspects are not perfect.The lack of the system leads to the abuse of capital majority in China.This voting mechanism,which seems to conform to the legal provisions of both entities and procedures,is also in danger of damaging the legitimate interests of the company and small and medium shareholders,hindering the realization of the principle of equality of shareholders and leading to the "skeletonization" of the general meeting of shareholders.For the protection of shareholders’ rights,in December 2016,the judicial committee of the Supreme People’s court passed the judicial interpretation of the company law(4),in which Article 5 added the types of flaws in the company’s resolutions,and added "not established" on the basis of "invalid" and "revocable";in April 2019,the judicial committee of the Supreme People’s court passed the judicialinterpretation of the company law(5),the six interpretations stipulate that the performance of legal procedures cannot exempt the liability of compensation for connected transactions,the invalidity and cancellation of connected transaction contracts,and the time limit for the company to distribute profits,which are related to the vital interests of small and medium-sized shareholders.From the point of view of the above two legislations,the legislation pays attention to the protection of the interests of small and medium-sized shareholders year by year,the balance of internal power of the company,and provides more and more powerful guarantee for the operation of domestic and foreign-funded enterprises.The value of capital majority is precisely reflected in the fact that most of the issues involved in the above-mentioned legislation need to go through the company resolution applying capital majority.On the one hand,we should recognize the legal value and social value brought by the capital majority decision.On the other hand,we should base on the background of the deepening reform and opening up,the judicial interpretation inclines to the protection of shareholders’ rights,and define the recognition standard of the abuse of the capital majority decision.Based on the analysis and summary of the experiences of the common law system and the civil law system in regulating the abuse of capital majority,according to the national conditions of our country,we should apply the cumulative voting system,encourage the application of weighted voting system to improve the voting mechanism of the company,adhere to the measures of reducing state-owned shares to optimize the company structure,reduce the threshold of temporary proposal right,learn from the shareholders’ fiduciary duty,and build the accountability mechanism.