Research On The Power Allocation Of Shareholders' Meeting And The Board Of Directors

The definition of the boundaries between the company's shareholders' meeting and the board of directors,and how to properly allocate power among different company agencies to achieve good corporate governance is one of the core issues of the corporation law.Although China's current law makes a more specific enumeration rule on the powers of shareholder's meeting and the board of directors,due to the limitations of legislative technology and the law does not clarify the status and function of the board of directors,the boundaries between the shareholders' meeting and the board of directors are not clear,leading to arguments in the practice of company governance.The Shareholders' Meeting and the Board of Directors have caused many disputes over the exercise of their powers.These disputes mainly reflect three issues that are not clearly clarified in the distribution of the shareholders' meeting and the board of directors by law.First,whether the company's articles of association can break through the powers of the shareholders' meeting and the board of directors stipulated by the company law.Second,whether the powers of the board of directors stipulated in the company's articles of association can be exercised by the shareholders' meeting.Third,who should be the decision-maker when the company law and the company's articles of association do not clearly stipulate the power.Around the above issues,scholars from various countries tend to explain and demonstrate them by means of shareholder primacy or director primacy as the principle of distribution.Under the global trend of using the director primacy as the legislative principle of the power distribution between the shareholders' meeting and the board of directors,Chinese corporate law scholars agree that director primacy should be the reforming direction of China's corporate law.However,the differences in national conditions and the differences in governance issues faced by various types of companies will inevitably lead to different legal adjustment needs.The issue of the boundary between the shareholder meeting and the board of directors is a problem that cannot be explained and solved just by director primacy.This paper analyzes the relevant literature and materials,summarizes and analyzes the current law in China,and combines the empirical research methods with the status quo of the internal governance of Chinese companies,analyzes the national conditions and characteristics of corporate governance in China,and combines the characteristics of various types and forms of companies,trying to re-structure the reasonable legal assignments between shareholders' meeting and the board of directors.And try to conduct a comprehensive argument through the following four chapters:The first chapter discusses the basis of the power distribution between the shareholder's meeting and the board of directors from the theoretical level.Starting from the theoretical basis of the separation of the shareholders' meeting and the board of directors as different company organs: it is far-reaching in enabling the company's legal personality to fulfill its behavioral ability,because of that,the company would be engage in legal acts and quasi-legal acts as legal subjects and factual behavior is possible.Among them,the shareholders' meeting is the statutory authority,which is responsible for the formation of the company's will;and the board of directors is the statutory executive body,which is responsible for the internal and external representation of the company's will.The reason why the board of directors is stipulated as the statutory executive organ of the company is that the mandatory provision of the internal organization structure of the company which is to protect the normal operation of the legal person's internal governance mechanism and to protect the interests of minority members and the company's creditors.In addition,the legislation endows the board of directors the capabilities of business management authority based on the consideration of reducing transaction costs,achieving a balanced corporate governance structure and reducing the externalities of corporate governance.Secondly,discussing from the nature of the board of directors,the source of power to demonstrate the relationship between the board of directors and the shareholders' meeting,and the status of the board of directors as a company,thereby defining the reasonable boundary of the law's intervention on the authority of the company's organs: the company law should reduce the cost of negotiating between the company's stakeholders and promote the company on trading and securing transactions.This is not only the reason for the company law to regulate the internal governance of the company,but also the boundary for its use of mandatory norms to interfere with the distribution of authority of the company.As a "standard contract" model of the company and its stakeholders,the company law should provide a reasonable framework for the rights,obligations,responsibilities and arrangements of the parties to the transaction for references.The second chapter mainly analyzes the current legislation on the allocation of powers of shareholders' meeting and board of directors both at home and abroad.First of all,through the comparison of the power allocations on the board of directors and the shareholders in the company law,we found that there are three problems.Firstly,there's only one allocation mode for two totally different types of companies which is extremely unreasonable.Secondly,the legislation on the powers of the shareholders' meeting and the board of directors is too rigid and strict.Thirdly,by enumerating provisions of the shareholders' meeting and the board of directors,there are conflicts between the company law and other legal norms.Through a macroscopic study on the relevant provisions in company law of various countries,we found that it is a common practice in most countries to separate the power distribution of the company's organs from closed companies and open companies.The legislation on the closed-companies usually gives the company shareholders and the charter a high degree of autonomy.The regulations on the open-company have a tendency of giving the board of directors more power to manage the company efficiently.It is a corresponding to realistic foundation behind this trend.The third chapter discusses the realistic basis of the construction of the power distribution on the shareholders' meeting and the board of directors in China's company law.From the theoretical analysis of the distribution of the powers between different company organs,the governance characteristics,the main problems faced by corporate governance,and the scope of intervention for the law are different between the closedcompany and the public company.Therefore,China's company law should learn from other countries' models and adopt the practice of Chinese companies.Through empirical research and analysis,it is found that,on one hand,China's limited liability company has a small number of shareholders and a high proportion of natural person shareholders in the governance practice.In the establishment of the company,it tends to choose to set executive-directors instead of the board of directors,and shareholders directly participate in the company.The internal governance of a limited liability company presents a characteristic that all of the company and the company's business control are highly coincident;at the same time,the major shareholder infringes the minority shareholders and the company's interests in a limited liability company by manipulating the company's operations.The most important problem of governance here is reflected in the fact that major shareholders use the statutory powers of the board of directors to exclude minority shareholders from the company's key business decisions.On the other hand,due to the large amount of capital raised by the company,the public company has the characteristics of numerous shareholders and scattered shares.The level of governance of the board of directors of listed companies in China is low,especially in terms of the structure of the board of directors and the behavior of the board of directors.The main reason is that relevant laws and regulations and normative documents focus on the establishment of institutions in corporate governance,and do not pay attention to whether the mechanism for the distribution of shareholders' meetings and board of directors in the company's operations is effective and smooth.The quality of the governance of non-listed companies is even more worrying.However,the public company has the problems of "controlling shareholder" and "internal control".The controlling shareholder often uses the board of directors to damage the interests of small and medium shareholders,mainly reflected in the infringement of the decisionmaking and supervision rights of small and medium shareholders.Therefore,the different types of companies face various governance problems in practice.The fourth chapter mainly puts forward specific suggestions for the reorganization of the power allocation between the shareholder's meeting and the board of directors in China's company law.The first is to clarify the status of the board of directors as the company's executive body.Based on this,rationalizing its relationship with the shareholders' meeting is the basis for re-structuring their power structure.From the overall perspective,the internal organizational structure of the company with the shareholders' meeting as the company's authority and the board of directors as the executing agency is the clearest setting for the company as a legal subject.The board of directors should not be confused with the functions it undertakes to identify the board of directors as a decision-making body.Secondly,according to the characteristics and needs of different types of companies,the rules for the allocation of power between the shareholders' meetings and the board of directors should vary.Among them,the limited liability company shall be arbitrarily regulate,and the company law shall make a linear provision on the functions and powers that must be exercised by the shareholders' meeting,and clarify that such authority shall not waive or authorize others to exercise,leave the specific content of the company's power distribution to the company's charter,and clearly stipulate that the functions and powers not specified in the charter shall be exercised by the shareholders' meeting.For the company limited by shares,the higher the degree of openness,the higher the degree of mandatory norms,the higher the principle of the distribution of authority of the company's organs.In addition to the provisions on the exclusive powers of the shareholders' meeting,the company law should also make mandatory arrangements for the structure of the power distribution of the shareholder's meeting and the board of directors,and empower the specific matters to the company's articles of association.