A comparative study of the ownership control vs. management right issue between the Chinese enterprise laws and Canadian corporate laws
University of British Columbia
Master of Laws - LLM
An examination of the different laws concerning the ownership control vs. management right issue in China’s legal regime as well as in Canada’s legal regime will provide the basis of further comparison and analysis. In light of statutes as well as relevant Canadian case law, some literal differences are shown. The analysis of legal implications of the literal differences of the laws involves four approaches. These are the relationships between the owners and the corporate management, the ownership composition, the government treatment of the government entities, and the commitments, interests and liabilities of the directors. In the SOECs, the government controls have been curbed and the autonomy of the enterprises has been advocated in recent years by legislation and dominant Party policy. The boundary of government control over the SOECs and the enterprise autonomy has not been defined clearly. In the CCCs government controls have been kept very firm by statute and case law. In the SOECs, the ownership right of the enterprise assets belongs to the state whereas the statutory right to possess, utilize and dispose of the enterprise entities belongs to the enterprise. The division of the ownership right and the property right to the same object - the enterprise assets - renders a certain inconsistency in managing the enterprise business. However, the ownership of the CCCs is exclusively in the hands of the government. The ownership of the Canadian private corporations lies exclusively in the corporation - the judicial person itself. The pure ownership composition may reduce the tension of the owners and management to a minimum level. A SOEC is treated by the government both as a government appendage, designed to carry out government policy, and a self-survivor. A CCC is treated by the government as a special instrument. The directors of the Canadian private corporations can enjoy substantial autonomy in managing corporations, although in many circumstances they are subject to the courts’ involvement. The Chinese Enterprise Laws require the directors to fulfill their mandates - the commands of the government - although at the same time they are expected to make the enterprises as profitable as possible. The directors of the CCCs have an interest in fulfilling their commitments to the government, which are to serve the mandates of the CCCs. The interests and commitments of the directors in Canadian private corporations lie in making competitive capital return for the corporations and the shareholders The reasons why different legal implications exist in the different economic and social milieus. And significantly, it is found that both the legislative implications of the CCCs and the SOECs reveal a kind of compromise.
Law, Peter A. Allard School of