On March 20, Zhongchang Big Data Corporation Limited(600242) announced that according to the proposal of the controlling shareholder Sansheng Hongye, the board of directors decided to remove Zeng Jianxiang, President and two vice presidents, because they failed to effectively resolve the company’s operating difficulties and risks; Director Zeng Jianxiang (concurrently president) voted against the motion to remove the two vice presidents, saying that the relevant removal procedures did not comply with the regulations. The Shanghai Stock Exchange issued an inquiry letter asking the company to explain whether the procedures for voting on the proposal of the board of directors are legal and compliant and whether the voting results are legal and effective.
Zeng Jianxiang’s reasons for opposition include: the removal procedure of the vice president does not comply with the provisions of article 107 of the articles of association. Without the proposal of the president, the board of directors cannot directly remove the vice president and nominate the executive vice president. According to the articles of association of Zhongchang Big Data Corporation Limited(600242) , article 107 stipulates that the exercise of powers by the board of directors includes “appointing or dismissing the company’s manager and the Secretary of the board of directors; appointing or dismissing the company’s deputy manager, financial director and other senior managers according to the nomination of the general manager”… In addition, article 128 also stipulates that the general manager (president) is responsible to the board of directors, The exercise of functions and powers includes “proposing to the board of directors to appoint or dismiss the company’s deputy general manager (vice president) and financial director”.
The above contents basically comply with the provisions of articles 46, 49 and 113 of the company law. Now the question arises: can the board of directors of a listed company directly consider the dismissal of the deputy general manager without the request of the general manager?
According to the corporate governance framework established by the company law, the board of directors is responsible to the general meeting of shareholders, and the (general) manager is responsible to the board of directors, while the deputy (general) manager and the person in charge of finance should be responsible to the (general) manager to a considerable extent. The company law stipulates the “cabinet formation right” of the (general) manager to the deputy of the management level. The management level is at the executive level of the company’s affairs. If the subordinate of the (general) manager is not nominated or proposed for dismissal, there may be problems in the coordination, communication and restraint between the principal and deputy, and the implementation will be greatly reduced. Therefore, although the final appointment, dismissal and assessment of the deputy general manager and the person in charge of finance are still in the power of the board of directors, the nomination or dismissal of the deputy (general) manager and the person in charge of finance by the (general) manager is an essential procedure. The board of directors directly crosses this link and does not comply with the legal process.
In my opinion, if the board of directors wants to dismiss the deputy (general) manager, it is the right way, or it should first dismiss the original (general) manager of the company and appoint a new (general) manager, and then the new (general) manager will propose to dismiss the original deputy (general) manager and appoint a new deputy (general) manager. The board of directors dismissed the (general) manager and deputy (general) manager almost at the same time. There were obvious defects in the legal process, and the validity of the voting results of the board of directors was in doubt.
It is noteworthy that the proposal of the board meeting to remove the general manager and deputy general manager in this case is the proposal of the controlling shareholder Sansheng Hongye. So, which subjects have the right to submit proposals to the board of directors of listed companies? The author checked the relevant laws and regulations and did not find clear provisions. However, Article 110 of the company law stipulates that shareholders representing more than one tenth of the voting rights, more than one-third of the directors or supervisors may propose to convene an interim meeting of the board of directors; These subjects should have the proposal right of the board of directors at the same time.
At present, there are no clear provisions on what contents shareholders propose to the board of directors are legal and compliant. Article 4 of the company law stipulates that the shareholders of the company have the right to choose managers according to law; However, this power belongs to a part of corporate governance activities and should be arranged under the framework of the whole corporate governance system. When shareholders choose managers, they should not directly nominate or propose to dismiss senior executives, which is too long. Instead, they should first select directors and supervisors, and then indirectly select senior executives in accordance with the governance structure stipulated in the above-mentioned company law. Otherwise, it may lead to the power struggle between shareholders and the board of directors and the confusion of corporate governance.
The right to initiate a lawsuit directly against the shareholders or the executives is not the same as the right to initiate a lawsuit directly against the shareholders.
On the whole, the company law divides the boundaries of rights and responsibilities for shareholders, the general meeting of shareholders, the board of directors, the chairman of the board of directors, the general manager, the deputy general manager and the person in charge of finance. The rights of any subject are limited rather than unlimited. Any governance behavior beyond the level, level and boundary can violate laws and regulations or violate the articles of association. Only when all kinds of subjects strictly abide by the company law and other laws and regulations and the articles of association, are responsible for each level, and jointly focus on the goal of improving the company’s benefits or interests, the development of the company will be on the right track.
In addition, the current company law and other provisions on the rights and responsibilities of the above-mentioned relevant subjects are not particularly clear in some places, which need to be further supplemented and improved. If the legal boundaries of the functions and powers of the relevant subjects are clearly divided, the fuzzy space of competing for power can be minimized, and the cornerstone of the corporate governance system can be tamped more solidly.
