Research on Models of Corporate Governance Structure under Corporate Law in China

Abstract

Shareholders tend to grant their power to the board of directors nowadays, namely they want to be investors instead of managers. At the same time, the Corporate Law of the Peoples Republic of China (henceforth referred to as Corporate Law) is amending now, which proposes to change the corporate governance structure model. The second draft of the amendment was promulgaged on 30th December 2022. Compared with the first draft, the legislative body has changed its views about the boards authority, a general item before, to provide an enumerated item. In other words, this law sticks to the shareholders meetings centralism model instead of the board centralism model. This article argues that the limited board centralism model that combines the board centralism model and offensive shareholder activism is more suitable for China. Professional employees must maintain the daily operation of Chinese companies and expand the boards authority to protect shareholders rights items in the law. This paper will explain the idea of limited board centralism and explain why it could suit China and the effect of applying it in practice by comparing it with foreign laws.