Disputes about corporate expression absorption and their legal remedies |
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Authors: | Xiaofeng Guan |
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Institution: | (1) Commercial Law Research Institute, School of Civil and Commercial and Economic Law, China University of Political Science and Law, Beijing, 100088, China |
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Abstract: | Corporate expression is the expression that a company gives to the outside in its capacity as a legal entity. Often referring
to resolutions made by shareholder meetings and the board of directors, based on good faith and bound by contractual spirit,
a company must be held liable for its expression. Corporate expression absorption refers to the corporate behaviors and situations
wherein the majority voting shareholders and directors replace the will of the minority voting shareholders and directors
within their own will. Among them, the majority voting shareholders at a shareholders’ meeting (shareholders’ general meeting)
are decision-making shareholders, and directors, managers and other senior management staff that decide corporate affairs
are called decision-making members. Corporate expression absorption consists of two sorts: absorption by shareholders’ meeting
and absorption by the board of directors. Shareholders’ meeting is a company’s authoritative organization; when the voting
rights of some shareholders exceed the statutory limit, they will be able to manipulate the expression of shareholders’ meetings
and replace the will of other shareholders with that of their own. The expression absorption by the board of directors refers
to the practice wherein the majority directors decide on important corporate matters in accordance with the majority rule.
Thus, it can be seen that the corporate expression absorption is a double-edged sword, not only capable of uplifting operational
efficiency but also likely to help decision-making shareholders achieve personal gains and transfer corporate interests. As
for the disputes of corporate expression absorption, the following legal remedies might be adopted: (1) Limit the voting rights
of decision-making shareholders. (2) Provide shareholders with veto power over specific events. (3) Ask the chambers of commerce
(industry associations) to arbitrate specific events. (4) Preserve the market value of shares held by dissenting directors.
(5) Expand cumulative voting; (6) Provide shareholders the right to exit. (7) Legal remedies for corporate deadlock. (8) Shareholders’
derivative lawsuits.
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Translated from China Law, No. 4, 2005 |
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Keywords: | corporate expression corporate expression absorption corporate decision-making members voting frauds voting relief settlement of corporate deadlock |
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