Abstract
According to the Company Act, to convene a regular shareholder¡¦s meeting, a majority of the shareholders who represent more than 50% of the total number of the company¡¦s outstanding shares shall be present. It is also regulated that a shareholder may stipulate the scope of authority in the proxy issued by the company and appoint a proxy to attend the shareholder¡¦s meeting on his behalf. Due to the dispersion trend of ownership structure of domestic listed companies, where some mid/large-size companies with long histories have, in average, less than 20% of shareholding of board of directors, it seems reasonable for companies to rely on proxy solicitation in order to convene a shareholder¡¦s meeting, have all proposals resolved, and elect board members.
The operation of a business entity and its corporate governance are closely tied to the effectiveness of its top management. However, domestic listed companies in general are unable to separate the ownership and management, and therefore those who obtain the management become the management team of a company. As a result of relatively low shareholding held by major shareholders of domestic listed companies, lower cost of proxy solicitation than buying shares from the market, and less care about proxy rights from individual investors, major shareholders in listed companies intend to win more seats in the board via proxy solicitation in order to obtain management. For the above reasons, proxy solicitation becomes an important tool in determing management of listed companies, their operation and corporate governance.
Proxy makes it possible to obtain the management of a corporate with relatively low shareholdings, resulting in asymmetry in cost and management obtained, and this might pose risks on company¡¦s corporate governance. However, on the other hand, proxy assists convening a shareholder¡¦s meeting, and therefore become an indispensable tool in defending the management of a corporate with honesty and integrity. With all the advantages and disadvantages, proxy is of great importance for individual corporate and overall operation of economy. The research conducts a case study on C Company with references on other listed companies to explore the
impacts of proxy on management and operation of a company and its corporate governance. Pros and cons for proxy solicitation are summarized while solutions are proposed.
The result of the research shows that listed companies demonstrate deep reliance on proxy. Whether or not a listed company conducts business with honesty and good faith, its major shareholder is likely to exploit the advantages to obtain unsymmetrical positions in the board in contrasts with its low shareholding. However, the performance of corporate governance afterward depends on the integrity and conscience of the management team, and actually has no direct link to proxy solicitation. Also, with the ¡§winning betting¡¨ nature to achieve management leverage, proxy solicitation could be a possible factor for corporate mis-governance. To avoid the unfairness caused by proxy solicitation and enhance corporate governance, competent authorities must consider revising the Company Act and related laws instead of revising regulations governing proxy solicitation alone. Suggestions in this research include the following:
(1) To abrogate rules in the Company Act providing that ¡§to convene a regular shareholder¡¦s meeting, a majority of the shareholders who represent more than 50% of the total number of the company¡¦s outstanding shares shall be present¡¨. (2) The number of shares present via proxy solicitation, voting right and election right shall be discounted. (3) To promote electronic voting, split of voting rights of institutional shareholders, and adoption of nomination system for the director election. (4) To change the election method of independent directors, where the new method elects the independent director based on the number of voting individual shareholders, rather than the cumulative voting shares.
The suggestions are proposed to provide a reference for competent authorities.
Key words: proxy, corporate governance, board election, management,
electronic voting, board election nomination system
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0630110-154625 |
| Date | 30 June 2010 |
| Creators | Wu, Chun-hui |
| Contributors | Hsien-tang Tsai, Iuan-yuan Lu, Tsuang Kuo |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0630110-154625 |
| Rights | not_available, Copyright information available at source archive |
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