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On a cumulative voting system

Author: TanYaoZuo¡¡LiuWei From: www.yourpaper.net Posted: 2009-07-11 00:57:34 Read:
Abstract: The emergence and development of the cumulative voting system has experienced more than a century, history has proven, the cumulative voting system in line with the concept of protecting the interests of minority shareholders, and this system has been confirmed by law in our country. Practice has proved that this system there are still some problems of this special environment. Effectively protect the interests of small shareholders, in addition to the development of the cumulative voting system, also requires the establishment and improvement of other related systems. ª¥
Keywords: cumulative voting system; interests of minority shareholders; New Company Law ª¥

Overview of a cumulative voting system ª¥

Cumulative voting system, the shareholders of each of the shares held by the shareholders 'meeting to elect directors or supervisors, have one of the shareholders' meeting to elect directors or supervisors of an equal number of voting rights of shareholders either election concentrate all voting rights also dispersed elections the number of people, and finally decided by the number of votes elected directors or supervisors. ª¥
This system from the point of view of political science originated in the United Kingdom, from the perspective of the Companies Act originated in the United States, and in the latter part of the last century has been a major development in the United States. 1860s, Illinois, USA, the press revealed Honshu some railway operators fraudulent behavior of small shareholders, the state then in 1870 in the provisions of Chapter 3 of the Constitution of the State 11, any shareholder in the corporation to elect directors or managers any occasion, both in person or by proxy, exercise cumulative voting rights, and such directors or managers shall not be elected in any other way. Subsequently, the State of the Companies Act 28 also provides for cumulative voting system. After that, the U.S. states have followed suit, or in the Constitution or in the company law, or part specified in the Constitution and the Companies Act, shareholders cumulative voting system. Legislative attitudes and legislation technically state practices vary: California and Illinois, the legislation to implement coercion cumulative voting system, and some other states to implement the license cumulative voting system. Later, with the vigorous development of the modern company, Delaware established to attract large companies to the state to get the tax and to promote the state's economic development, we will repeal the existing legislation, cancel the cumulative voting system, other states followed suit Delaware , the abolition of the system. ª¥
Japanese Commercial Code modified in 1950, modeled on the U.S. legislation of an additional 256 three through Act No. 167, provides for cumulative voting rights of the shareholders. Under that section, even if the company's articles of association provisions of the election of directors by cumulative voting system, but if the holdings accounted for more than 1/4 of the total issued shares shareholders request, the company must adopt a cumulative voting system. Japan in 1974 by Act No. 21 of this section has been modified. The revised subsection 1, a company may exclude a cumulative voting system applicable statutes. ª¥
Different countries and regions of the world on the legislation of the cumulative voting system. A mandatory cumulative voting system; another permissive cumulative voting system. License cumulative voting system can be divided into two types, The first type is selected, unless the basic articles of association of the company or a subsidiary of the articles of association to exclude the cumulative voting system, it should adopt a cumulative voting; election into, unless the company's Articles of Association cumulative vote not to adopt a cumulative voting. ª¤

2 of the cumulative voting system and the problems ª¥

The late 1990s, the regulatory authorities parties for comments, the cumulative voting system as one of the best programs for improving the electoral system of the shareholders' meeting was finally written into the the SFC introduced "Corporate Governance Guidelines" (2002). "Governance Guidelines" in the provisions of Article 21: "The election of directors, should adequately reflect the opinions of minority shareholders. Shareholders' meeting for the election of directors should actively implement cumulative voting system controlling shareholder holding more than 30% listed companies should adopt a cumulative voting system. listed companies should adopt a cumulative voting system in the implementation details of the system provided for in the Articles of Association. "This is the first time clearly stated in our regulatory documents in a cumulative voting system requirements from governance guidelines . View of the representation of the system, to take on the whole of the criteria for a license 'policy ideas, just on the part of the controlling shareholder holding more than 30% of the listed companies to adopt a mandatory compulsion doctrine. Since the "Corporate Governance Guidelines" AG equity governance mechanisms introduced cumulative voting system, in addition to the Shanghai Stock Exchange in 2005 drafted a proposed draft of a cumulative voting system implementation details for the related listed companies in the amendments to the Articles of Association of the Company reference, there is no information about the implementation details of the cumulative voting system or operating guidelines. Since the proposed draft does not have a mandatory effect, practice, listed companies to understand and use this system is not uniform. ª¥
The director of a joint stock limited company is a limited number of relatively large shareholders of each of the shares held by minority shareholders to the shares held for the gap between the very large. Therefore, in order to play a role in the cumulative voting system, need the coherence between the majority shareholders, the appropriate concentration of the elections, in order to make their own favorite candidate elected. If the minority shareholders are not taken broadly consistent with the position, the cumulative voting system will produce a great deal of uncertainty, and even lead to deadlock. Small shareholders, although the group is large, but the relative dispersion of concern for their own profit greater than the exercise of the ownership and control of the management of listed companies, and their own time and space constraints and not able to attend the shareholders' meeting. This way, resulting in the loss of the vote of the directors on behalf of the interests of minority shareholders potentially, reduces the chance makes on behalf of the interests of minority shareholders directors is selected. ª¥
According to the provisions of section 117 of the Companies Act, the Board has made a resolution, should have more than half of the directors present, and adopted by a majority vote of all directors. Shareholders will vote system, the Board of Directors based on the number of directors to determine the number of votes, the implementation of one-person-one-vote voting rights, that a director has one vote. This means that in case of conflict of directors represent the interests of shareholders, with the relative majority of the representatives of the directors of their own interests is the key to winning in the resolution of the Board. From the contents of the two aspects of the cumulative voting system, the number of shareholder votes in proportion to the number of shares held, while adhering to the principle of majority rules, while expansion in the number of small shareholders vote in accordance with the number of shares held, the largest shareholder held Votes year-on-year expansion, which determines the cumulative voting system, a small number of large shareholders will continue to control the majority of the board seats by virtue of its shareholding number of advantages, and this is based on the resolution of the Board passed the resolution in its favor. ª¤ 3 actively improve the cumulative voting system ª¥

As a famous scholar plum Sinorise said: "cumulative voting system in safeguarding the interests of minority shareholders to prevent major shareholders fully manipulate the board of directors, reduce the risk of centralized decision-making, and to correct the drawbacks since then elections to elect the wise Synergy, and checks and balances within the Board and the purpose of the 'Company democracy' played a positive role. "ª¥
Combined with China's reality, the cumulative voting system is designed to directors (supervisors) to achieve the balance of power in the Council, to make up for the defects of Majority Rule truly benefit from the system is often the largest shareholder holdings after shareholders. However, due to the dominance of China's listed companies are fairly common, from China's listed companies as of the current practice seems to be no substantial change in shareholding after the largest shareholder of shareholder status before and after the implementation of the system, they are still accustomed to in advance with the largest shareholder of the distribution of seats in the Board agreed through negotiation and compromise. For ordinary shareholders of tradable shares float is small and highly fragmented, although the number of cumulative voting system less practical significance, it is more a manifestation of the regulators, a gesture. ª¥
To actually protect the interests of small shareholders, only the cumulative voting system is not enough, and constantly improve the cumulative voting system, the reference to the legislation and practice of other countries, in this country protect minority shareholders' interests and the interests of the company system in addition to the cumulative voting system need to establish or improve the system, such as: improving shareholder people will attend the system, voting system, increase people shareholder voting rights restrictions, strict company letterhead acute disclosure system, and strengthen the people shareholders, the directors of the company, minority shareholders of fiduciary duties, additional director of the dismissal of the complaint, on behalf of shareholders litigation, shareholders will be the effectiveness of the litigation, given the small shareholders' general meeting of their own right to convene, the right to make proposals and the specific circumstances of the shares appraisal right in a foreign country proved to be success of an effective system, when its essence, to ensure that the interests of small shareholders, the protection of China's market economy to a more orderly and effective development. ª¥
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