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Employees to participate in corporate governance and its constraints on related party transactions

Author: KongDongJuˇˇQiZhiCui From: www.yourpaper.net Posted: 2009-10-29 00:40:18 Read:
Abstract: workers participate in company decision-making to a certain extent, can improve the corporate governance structure, economic democracy, related party transactions and unfair play a regulatory role, safeguarding the legitimate rights and interests of the employees of the company. China "Company Law" of employees to participate in corporate governance has made the appropriate provisions, but the actual implementation of the effects of view, there are still defects, need to be improved.
Keywords: workers; corporate governance; related party transactions

Corporate Governance refers to the leadership and supervision, the company is a corporate division of powers based on the right set of obligations, responsibilities and operation implementation, the continued growth of the company's enterprise value, the construction of the shareholders and other internal stakeholders between the interests of balancing mechanism [1]. Employees to participate in corporate governance refers to workers based on the status of its workers in the company, rather than to the identity of the shareholders through a certain way or institutional arrangements, to some extent involved in company management decision-making. Employees to participate in corporate governance will help to improve the corporate governance institutions contributed to the constraints of the main interests of the company's internal and coordination, strengthen the protection of the interests of workers, the company is also the performance of the legal system matures one.

First, the theoretical basis of the employees to participate in corporate governance and

(A) Employee participation in corporate governance theoretical basis
Employees to participate in corporate governance reasonable basis, the scholars have a variety of expositions. Among them, a representative stakeholder theory, human capital theory and economic theory of democracy.
1. Stakeholder theory. Traditional corporate system in dealing with the relationship between shareholders, creditors, employees and other shareholders 'interests will always be in the privileged position that "the shareholders' interests first. But since the 1980s, the company stakeholder theory of the traditional corporate law concept challenges advocate company is composed by various interest equal stakeholders, shareholders just the one, managers not only to for shareholders, but also for all the interests of the company's interests, the company's goal is to promote all the relevant people and not just the interests of the shareholders [2]. To achieve this goal, the company's stakeholders should have the right to participate in corporate governance in a corresponding manner.
Human capital theory. Due to the impact of the principle of "first capital" in the tradition of the Companies Act, the company system is mainly dedicated to the rights defined asset owners and their authorized agents, employees of the company completely constrained investors. However, with advances in technology, the quality of workers, knowledge and skills for the development of enterprises increasingly important, the capital core dominance has been challenged. The winner of the 1979 Nobel Prize in Economics Professor Schultz, human capital is to promote economic growth, mainly due to today's era, is a type of capital embodied in workers who have an important role in social production [3 ]. Therefore, the providers of capital and labor providers in the distribution of corporate profits, and participate in enterprise management should be given equal respect.
3. Economic theory of democracy. Traditional democratic theory, the definition of "democracy" as a political concept that democracy is only a means of political democracy. After World War II, the trend of democratic socialism to become one of the world's most important contemporary political thought, to believe that democracy is not just a form of organization of the country's political life, and should be the social and economic life of the organization, which put forward the theory of economic democracy [4 ]. According to the view of the economic theory of democracy, the primary meaning of democracy is participation, the shareholders based company system, the Company democracy is just a "capital of democracy", the employees are outside of democracy and corporate governance structure, with modern democratic incompatible with the idea of ??[5]. Therefore, employees should be allowed to participate in the modern corporate governance in order to achieve economic democracy in the micro sense.
The above theoretical basic content, different angle elaborate, but can well explain the rationality of the employees to participate in corporate governance.
(B) Employee participation in corporate governance pathway
From a global perspective, the model of corporate governance can basically be divided Germany, the German-Japanese model and as the representative of the United Kingdom of the Anglo-American model. Different modes, the ways and means for employees to participate in corporate governance.
Germany. German corporate governance model is a dual governance structure, the organization of the company is divided into a shareholders' meeting, board of directors and board of supervisors. Its workers to participate in the system is built on two levels, the level of corporate affairs and workers' rights, participation and business management level participation. The former social participation, the latter economic participation, the former is the basis of the latter. Employees through participation in the Board of Supervisors is the main way for workers to participate in company decision-making established in Germany and France. 1951 13 "Metallurgical Mining Labour Participation decision also provides for Metallurgical Mining must appoint an employee representative, enjoy the same rights as the members of the Board. In addition, employees can also be determined by the the enterprise parameter decision Committee and the Economic Commission or the Labour Agreement participation in corporate decision-making [6]. From a formal point of view, Germany can be regarded as employees to participate in the system of the most comprehensive national workers can participate in corporate governance by the board of directors and board of supervisors. However, this model of corporate governance after decades of running its drawbacks are also obvious that too many members of the Supervisory Board, the supervision of the Board of Directors, the lack of sufficient information, the inefficiency of the Supervisory Committee [7].
2 UK. On the British model of corporate governance is one yuan governance structure, the typical characteristics of the organization of the shares of the company's shareholders' meeting and the board of directors, in addition there is no independent oversight body, its oversight functions by the part of the board of directors of non-business-executive directors exercise, therefore, it is not possible by providing for employees to participate in the Board of Supervisors to participate in corporate decision-making. According to the provisions of the UK Companies Act 1985, an employee participation in company decision-making by the directors' report provides system information about their employee status, such as the company employees regularly to the employees or their representatives consulting, employee stock ownership or other means to encourage employees participate in company operations.

Second, on the Participation of Workers in the major requirements and problems

Overall, the ways and means for employees to participate in corporate governance and capital markets, equity structure, history and culture of a country is closely linked. As far as China is concerned, China is a socialist country, and implementation of public ownership of the means of production workers enjoy the fine tradition of democratic management rights of state-owned enterprises. Since the restructuring of state-owned enterprises for the company, the development of the capital market is still not mature enough, company equity is relatively concentrated, this situation is similar to Germany. Legal aspects of Chinese workers involved in corporate governance has a constitutional basis. Provisions of Article 18, paragraph 2 of the Companies Act, the Company in accordance with the provisions of the Constitution and relevant laws, by the workers' congress or other forms, practice democratic management. "The provisions of Article 45, paragraph 2," two or more state-owned enterprises or more than two other state-owned investment entities set up a limited liability company, its board members should be representatives of the employees; board member of the limited liability company representatives of the employees in the workers' representatives in the board of directors by the representatives of the employees of the company workers the General Assembly, the Trades Union Congress, or other democratically elected. "52 (2) and 118 (2) provides that the Supervisory Board should include representatives of the shareholders and an appropriate proportion of representatives of the employees, which employees' representatives shall not be less than 1/3, the specific ratio required by the articles of association of the company. Workers' representatives in the Board of Supervisors by the employees of the company by the workers on behalf of the General Assembly, the Trades Union Congress, or other forms of democratic elections. The above provision makes it clear that China pursues a model of corporate governance in Germany on behalf of the binary system, workers can participate in corporate governance by participating in the company authorities. This is the way of new workers to participate in the management of China "Companies Act" absorption of foreign legislative experience, and has a complete and advanced. However, from a practical implementation of more effective look, surviving in the apparent lack of workers to participate in corporate governance is difficult to realize.
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