Mechanism Perfection of Restrictionon the control
陈祥龙
【全文】
Mechanism Perfection of Restriction
on the control right in corporate governance
Chen Xianglong
Graduate student in law, East China University of Politics and Law
The Corporation Law of People’s Republic of China, which took effect in 1993, has established a mechanism of separation and balance among three major organs in the company, that is, shareholders’ general meeting , the board of directors and the board of supervisors. Such mechanism has refered to the political structure of separation of the three powers in western countries. It represents respectively the function of ownership, managership and supervisorship in the company’s operation. Shareholders’ general meeting as the top powerful organ in corporate governance is entitled to decide any major issues concerning the company’s development. Shareholders are owners of the company’s asset. They enjoy legally the right to benefit from their investment, make decisions on major issues and select candidates as directors and general managers. However, most shareholders are not engaged in management in person. Daily business activities, management and decision making have been trusted to the board of directors. The development of modern company steadily increases the importance of the board of directors. It’s the representative of the company and the symbol of power outside, and inside, it’s the decision-maker and commander.1 The practice of its function directly concerns the rise and down of the company. Therefore, the board of directors has been the core of control right in modern company. However, any person with power intends to abuse his power. The establishment of a effective mechanism to restrict the possible power abuse of the board of directors is necessary to ensure directors and managers to act in accordance with the objective of interest maximum for the company and shareholders and therefore, will be conducive to prevent the board of directors from figuring for personal interest and impairing shareholders’ interest.
