Discussion the Relationship between Shareholders and

Executives in Modern Company Management Mode

Tao Jiang

Tourism College of Zhejiang, 311231, Hangzhou, China

Abstract. The core question of the corporate governance is the relationship

between insider's self-interest and agency costs, the structure of corporate
governance should depend on the character and speciality of the company. A
comprehensive consideration on the human interests and agency costs is
necessary. Under the premise of protecting the interests of minority
shareholders, we need to obtain the balance among these legal interests.
Governance model of the Corporate law should be designed to guide
enterprises to unleash their own internal power. The most appropriate model of
governance need to be concordant with the capital structure, corporate
governance philosophy and other cultural elements. Company Law should have
less mandatory provisions. The model designed in Company Law should not be
a single one, but be a variety of options.

Keywords: Corporate governance, Shareholder, Executives.

1 Introduction

The company's shareholders and executives relationship, if pulled off the middle
layer" veil", despite the legal person personality regardless of, then the relationship is
clear and it is self-evident, the capital contributions of the shareholders to establish a
career, then raise or enlarge an army, hired executives to do professional management
work. But this is merely a hypothesis, problems exist in the corporate, this legal
fiction of independent personality in the study of the relationship between
shareholders and executives, whether it should be considered, and the extent of
influence of shareholders and executives to determine the relationship.
For the first problem, the answer is affirmative, the law now prepared the legal
subject, it should be in the company of relationship in the affirmative or even
acknowledged its core position. Disregard of corporate personality system
development and maturation depends on judicial practitioners of this concept
thoroughly internalization and academic discussions on the premise of the following.
Second how much the problem with the first question closely, since it is necessary to
take into account the company legal person personality, then of course must be
thoroughly with respect to its main body status. But actually otherwise, legal person is
prepared, hang from shareholders and executives. In the capital, will, foreign relations
and shareholders, executives are difficult to distinguish. Legal personality was used as

X. Qu and Y. Yang (Eds.): IBI 2011, Part II, CCIS 268, pp. 240–246, 2012.
© Springer-Verlag Berlin Heidelberg 2012
 Discussion the Relationship between Shareholders and Executives 241

a shield, or is it necessary to break, the company independent personality the

existence of an arbitrary object attributes, so that by the company contact the parties
are selectively using legal personality as a plea and arguments, to achieve a specific
objective. Is a legal fiction personality independence and dignity, one is related with
legal personality tool original intention and free, legal person personality faces
awkward condition, there is a law system will face such a conflict?
This article from the problem proceed with, apply value analysis, the method of
comparative study, attempts to explore the relationship between shareholders and
executives.

2 Problems Arising: The Interpretation of the Level of

Corporate Governance in Chen-Huang dispute

Academic Tong said that the shareholders will be composed of all shareholders, the
company's authority, the right to formulate rules and regulations and the company's
decisions on all matters, the company is set of organs, the power of shareholders from
the company's investors, shareholders by investing in companies which have shares.
Shareholders by the shareholders to express their will, election of directors. Board of
Directors by the directors, the directors will be elected by the shareholders. Board of
Directors is the executive organ of the shareholders, the shareholders will be
responsible.
Huang Guangyu is the 33.3% share of the largest shareholder, is also the
controlling shareholder of Gome. Chen is the Chairman of the Board and General
Manager. One is an important member of the shareholders, is a management leader.
Temporary solution to the dispute initiated by the controlling shareholder due to the
EGM. China's corporate governance structure designed to remain shareholders
centrism. Board of Directors by the shareholders will have its responsibility. Chen
Huang dispute reflects at least three major issues in corporate relations, one for
control of the shareholders and executives the right to operate when the target away
from the dominant issue, and second, for the controlling shareholders and minority
shareholders the balance between the demands of three independent personality for
the company in the above relationship status.
From Huang Guangyu's appeal, initially selected Chen Xiao as director, and give
the board dismiss directors rights, in which trust and interest consistency. After Chen
Xiao's" betrayal" of Huang Guangyu, the controlling shareholder of the case against
the introduction of foreign capital, and to take the way of additional, change of equity
structure, controlling shareholder status threat to Huang Guangyu. From the
perspective of the controlling shareholder of company capital majority, or even an
absolute majority, the interests of the company really and be bound together in a
common cause. The directors, as the manager, do not respect the company owners
advice, acting alone, even to the controlling shareholders interests. Which need to be
clarified in three, the board of directors on the board of directors who are responsible
for, the right to operate independent of whether ought to exist," betrayal".