Reform of the Limited Liability Company Law for the Enforcement of Good Corporate Governance
Year: 2023
Type: article
Abstract: The presence of majority shareholders who also hold positions as public company executives leads to a conflict of interest due to their dual status. During the general meeting of shareholders, these shareholders have the power to endorse the work plans of the directors and commissioners. As per the limited liability corporation law, shareholders are responsible for appointing and dismissing directors and commissioners. This study aims to investigate the conflict of interest that arises when a majority shareholder serves as a director or commissioner, utilizing normative legal theory. The research focuses on a sample of companies in the financial industry. The findings of this study recommend regulatory reforms to govern the voting rights of majority shareholders at the annual general meeting of shareholders (AGMS). It suggests that the AGMS should exclude the voting rights of shareholders with conflicts of interest. Additionally, any transaction involving a conflict of interest should require the approval of other shareholders, which can be deliberated during a general meeting of shareholders.
Source: Journal of Law and Legal Reform
Authors: Suwinto Johan, Lou Yuan
Language: English
Topic: Corporate Governance and Law
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4384816832