Abstract

This paper is dedicated to find the appropriate approach to adopt a new “shareholder proposal rule” for the improvement of the corporate governance of Chinese public companies. This paper argues that the current Chinese shareholder proposal rule is primitive and not practical and it does not provide a mechanism for the shareholders to seek remedies after their proposals are illegally excluded by the board of directors. In this paper, the author spends substantial effort on examining the Chinese shareholder proposal rule which is in its infancy stage. Based upon the examination of shareholder rules in nine representative jurisdictions, the author stresses that the proposal right should be treated and protected as one of shareholder’s fundamental rights. Unfortunately, the existing Chinese law does a poor job on securing this right. After demonstrating how the current corporate law and policies in China’s transitional economy indirectly eviscerate and limit the shareholder proposal right, this paper proposes that the Chinese legislators and the government agencies, especially the China Securities Regulatory Commission (CSRC), should notice this regulatory disadvantage and promulgate a practical and integrated shareholder proposal rule in order to encourage shareholder’s participation in corporate governance.