Research On The Distribution Of Powers Between The Shareholders’ Meeting And The Board Of Directors

The separation of ownership and management is the main feature of modern companies,on this basis,the allocation of the powers of the shareholders’ meeting and the board of directors has become an enduring common issue in the theoretical and practical fields of the company.How to allocate the company’s power between the shareholders’ meeting and the board of directors in order to promote the stability of the company’s structure and the efficiency of the company’s operation is the common pursuit of the legislators of the company law in various countries.In this regard,China is no exception.Through the combing of judicial cases in China,we can easily find that there are many controversies in judicial practice on the distribution of powers between the two boards of directors,indicating that there are shortcomings in the company legislation.In this regard,this paper would like to combine the examination and analysis of foreign corporate governance concepts and models,based on the actual situation and characteristics of corporate governance in China,to reasonably divide the powers of the shareholders’ meeting and the board of directors,in order to reduce disputes and friction in practice,and help promote the development of the company.The first chapter of this paper mainly summarizes the three major controversies in judicial practice by sorting out the adjudication cases.First,does the exercise of the board of directors’ authority by the shareholders’ meeting constitute ultra vires? In this regard,some courts have held that the resolution of the shareholders’ meeting on matters within the scope of the board of directors’ authority constitutes ultra vires,but some courts have held that the shareholders’ meeting,as the authority of the company,is entitled to exercise the authority of the board of directors and therefore does not constitute ultra vires.Second,can the statutory authority of the shareholders’ meeting be delegated to the board of directors? In this regard,some courts have held that the rules of the Company Law regarding the distribution of corporate powers among different organs only concern the company internally and do not involve the interests of third parties,and that the company’s resolution to delegate the rights of the shareholders’ meeting to the board of directors through the shareholders’ meeting is the legal space for its free will to function and a way to exercise its own rights,and the law has no right or need to interfere with it.Some courts,on the other hand,have held that the powers and functions of the shareholders’ meeting,which are provided for in the Company Law in an enumerated form,cannot be delegated to the Board of Directors.Thirdly,who shall enjoy the powers and functions that are not specified in the law and the articles of association? Some courts have held that the shareholders’ meeting,as the authority,is naturally entitled to all the powers of the company,regardless of whether they are explicitly stated in the company law or the articles of incorporation.Some courts,on the other hand,have held that the authority should be judged according to whether the matter to which it relates is a major matter concerning the rights and interests of shareholders or the day-to-day management of the company.The second chapter of this paper traces these disputes to the company legislation,looking for the root cause of the dispute and analyzing the inadequacy of the legislation.In this regard,first,the reason why there is a controversy in judicial practice about whether the shareholders’ meeting exercising the board of directors’ authority constitutes ultra vires is that the company law is unclear about the positioning of the shareholders’ meeting and the board of directors.On the one hand,the Company Law stipulates that the shareholders’ meeting is the authority of the company,and the board of directors is responsible for the shareholders’ meeting and executes the resolutions of the shareholders’ meeting,which seems to indicate that the board of directors is only a subsidiary of the shareholders’ meeting and has no independent status;on the other hand,the Company Law gives the board of directors the decision-making power on certain matters,and also stipulates the rules of procedure and voting methods of the board of directors,which seems to indicate that the board of directors has a certain independent status.Secondly,the reason why there is a controversy as to whether the statutory authority of the shareholders’ meeting can be delegated to the board of directors is because the legal language used in Article 37 of the Company Law is unclear,resulting in different understandings as to whether the Article is a mandatory or arbitrary norm.Third,the reason why there is a controversy over who is entitled to the powers and functions that are not listed in the law and the articles of association is that China adopts the legislative model of "enumeration plus underwriting of the articles of association" for the powers and functions of the shareholders’ meeting and the board of directors,without establishing general principles of distribution,which makes it impossible to objectively exhaust the powers and functions in the law and the articles of association.In practice,there is a huge disagreement over who should enjoy these unspecified powers.The third chapter of this paper,on the basis of examining the overseas experience and the governance situation in China’s practice,clarifies the concept that the shareholders’ meeting and the board of directors in China should adopt a mutually balanced division of powers.Further,based on this concept,it reinterprets the provisions on the relationship between the shareholders’ meeting and the board of directors in China’s company law and whether the exercise of the board of directors’ powers by the shareholders’ meeting is ultra vires,and at the same time,under the guidance of this concept,it clarifies the principles for identifying mandatory and arbitrary norms of the company law,and uses such principles to specifically identify the ten powers listed in Article 37 of the company law.In the fourth chapter of this paper,after clarifying the positioning of the shareholders’ meeting and the board of directors in China,specific suggestions for optimizing the legislative model of the distribution of their powers and responsibilities are further proposed.It is necessary to specify in the law the exclusive powers of the shareholders’ meeting,and then give the board of directors extensive powers to run the company,abandoning the existing legislative model of "enumeration and underwriting" of both the shareholders’ meeting and the board of directors,and providing principles for judging the attribution of powers that are not specified in the company law and the articles.