Regulated Minority Shareholder Exercise And Shareholder Activism

The protection of small and medium-sized investors has always been a constant topic in the capital market,and the Chinese capital market is constantly exploring and experimenting with it.The CSI Small and Medium-sized Investor Service Centre,established in 2014,is a major innovation in the process of exploration.The innovation of the Centre is to become a shareholder of a listed company by purchasing a single lot of shares of the company and to operate actively by exercising the rights and interests of shareholders,thereby achieving the objective of protecting the rights and interests of investors.Whether or not this innovative mechanism of the CIC has a practical effect on the protection of small and medium-sized investors is the focus of this study.This study firstly summarises the exercise of rights by the IRC,and analyses the specific effectiveness of the exercise of rights in the context of case studies of various exercise of rights,and compares the role and advantages of foreign institutions of similar nature in the capital markets of various countries(regions),and explores the uniqueness of the IRC in China and further investigates its effectiveness through empirical methods.In the process of empirical testing,this study firstly explores the way in which investment service centres exercise their shareholding rights and the factors that determine the choice of exercise rights,and then further examines whether the exercise of shareholding rights by investment service centres has an effect on shareholders’ active exercise of their rights.The results of the study show that:(1)investment service centres pay more attention to and exercise their rights for private companies that have received non-standard audit opinions,have lower levels of return on assets,have lower Tobin’s Q values,have received penalties from regulators and have a higher proportion of the first largest shareholding one year before being exercised;(2)the exercise of shareholding by investment service centres can promote more shareholders to participate in shareholder meetings to exercise their voting rights,but cannot drive more small and medium The above results indicate that the participation of the Investment Service Centre in the shareholders’ meeting The above results indicate that there is still room for improvement in the mechanism for enhancing the protection of small and medium-sized investors through the participation of CIC in the exercise of rights at shareholders’ meetings.In light of the findings of the study,we analyse the possible problems in the process of exercising rights by the CIC and make three suggestions to the CIC in light of the problems in exercising rights:improve the selection mechanism of the subject matter to enhance the authority of the work;strengthen the publicity and education work to enhance the voice of exercising rights;and supplement the resources of the supervisory staff to obtain more administrative support.