Minority Shareholder Protection in China’s Top 100 Listed Companies

The Australian Journal of Asian Law, Vol. 9, No. 1, pp. 88-119, 2007

33 Pages Posted: 21 Jul 2009 Last revised: 29 Jul 2009

Roman Tomasic

University of South Australia - School of Law; Durham University - Law School

Neil Andrews

School of Law Victoria University

Date Written: July 6, 2009

Abstract

Western economists have argued that the legal environment for the protection of minority shareholders and mechanisms for restricting the expropriation of minority shareholders will be important in determining the size and extent of a country’s capital markets. In China, the protection of minority shareholders is officially regarded as a major regulatory objective of those responsible for controlling the securities market. This is especially so in regard to Chinese listed companies. In practice, the position of minority shareholders in these companies is not well protected, suggesting that economic development and investment in listed companies does not fit neatly with expectations created by leading Western law and development theorists. This paper reports on findings from an empirically-based study of corporate governance in China’s top 100 listed companies that examined a broad range of corporate governance issues, in addition to the problem of minority shareholder protection. Major challenges in achieving better protection for minority shareholders arise from (1) the size of the majority block holdings held by the State in major Chinese listed companies; (2) the low priority that is in practice given to the protection of minority shareholder interests by controllers (as reflected in the high number of related party transactions); (3) the perceived sense of powerlessness of minority shareholders; (4) the inadequacy of civil remedies that are available under the People’s Republic of China (‘PRC’) company and securities law to seek to protect minority shareholder interests and the weak position of independent directors in these companies. These challenges are the subject of this paper.

Keywords: minority shareholders, corporate governance, corporate law, China's Top 100 Companies

JEL Classification: G34, K22, G15, G18

Suggested Citation

Tomasic, Roman and Neil Andrews, Minority Shareholder Protection in China’s Top 100 Listed Companies (July 6, 2009). The Australian Journal of Asian Law, Vol. 9, No. 1, pp. 88-119, 2007. Available at SSRN: https://ssrn.com/abstract=1430376

Roman A. Tomasic (Contact Author)

University of South Australia - School of Law ( email )

GPO Box 2471
Adelaide SA 5001
Australia

Durham University - Law School ( email )

Palatine Centre
Stockton Road
Durham, Durham
United Kingdom

HOME PAGE: http://www.durham.ac.uk

Neil Andrews

School of Law Victoria University ( email )

P.O. Box 14428
Melbourne, Victoria 8001
Australia
+61 3 9919 1826 (Phone)
+61 3 9919 1840 (Fax)

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