2 - Shareholder Voting and Engagement in China

Summary

Empowerment of minority shareholders has been a central theme of China’s corporate governance movements in the past two decades. Cumulative voting and the majority of the minority rule are exemplary of Chinese reformers’ efforts to strengthen shareholders’ rights to vote. Other shareholders’ rights, such as the right to call a meeting, the right to propose, and the right to information, are also in place and, at least in theory, enable public shareholders to engage the controlling shareholders of their investee companies. The practical effect of these legal rights needs to be evaluated in the context of China’s path-dependent conditions, notably the prevalence of concentrated share ownership, the relatively weaker presence of institutional investors, and the approach to allocating corporate power which centres on the shareholders meeting.