On Shareholder Voting Rights: Centered on the Competition for Corporate Control (Commercial Law Special Research Library)

Author: Liang Shangshang
Publisher:
Publish Date: 2005-06-01
Features: This paper primarily studies the relationship between shareholders' voting rights and the struggle for corporate control, pointing out that voting rights are the connecting point between corporate ownership and corporate control, thereby elevating the core status of voting rights in corporate law. The first part of the paper analyzes the concept of shareholders' voting rights. Starting from the phenomenon of "separation of ownership and control," the article seeks to find the true meaning of voting rights within the gap of this separation. After American scholars Berle and Means systematically analyzed the phenomenon of separation between corporate ownership and corporate management in public companies in 1932, they pointed out that shareholders had lost control over management, rendering voting rights meaningless. In response, based on an effective analysis of ownership structure, this paper argues that shareholders have not lost control over management but are instead controlled by one or several major shareholders. Moreover, during the process of separation of ownership and control, voting rights play an extremely important role—they are the connecting point between corporate ownership and corporate management. They not only maintain and regulate the relationship between corporate owners and managers but also serve as a tool for different shareholders to compete for corporate control, as well as a means for controlling shareholders to dominate small and medium-sized shareholders. How do voting rights function in the struggle for corporate control? The paper discusses this in two parts. In the second part of the paper, the struggle for corporate control is discussed from the institutional background of voting mechanisms. The paper argues that any struggle for control takes place within a certain institutional environment and points out that voting mechanisms themselves are colorless, capable of becoming a tool for to compete for corporate control. The paper analyzes the types and constitutive requirements of corporate resolutions, methods of exercising voting rights, cumulative voting systems, and the unified or divided exercise of voting rights. Additionally, it focuses on the exceptions to one-share-one-vote, arguing that super-voting shares expand the control of shareholders over the company, while non-voting shares, treasury shares, cross-shareholdings, and voting rights exclusion limit such control. In the third part of the paper, the struggle for corporate control is discussed from the specific exercise of voting rights. The paper primarily examines voting rights agency, proxy solicitation, voting rights trusts, and voting rights binding agreements, pointing out that they can all serve as tools in the struggle for control. The paper concludes that in response to this instrumental trend, a tendency toward the separation of voting rights and shares has emerged, along with a tendency toward the objectification of voting rights. In terms of remedies for voting rights, there has been a shift from primarily compensatory damages to primarily the revocation of corporate resolutions.