| The articles of“…unless it is otherwise provided by the bylaw”were introduced into the Company Law of China in 2005. According to such articles, legal norms of the Company Law, such as how to exercise shareholders’ voting rights in a limited liability company, how to distribute profits in a joint stock company limited, etc., can be opt out by the bylaw. These articles changed the nature of relevant legal norms from mandatory provisions to random ones.The proposition that companies should be free to opt out legal norms has been put forward by some important and influential scholars. The advocates of this opinion start from the view that the company is a contractual creature, a“nexus of contracts”. But there is a different legal basis between a bylaw amendment and an initial bylaw. An initial bylaw can be viewed as a contract binding all the shareholders, but a bylaw amendment, which does not require unanimous consent of all the shareholders, cannot be viewed as a contract (except that all the shareholders vote for the amendment). Consequently, one cannot rely directly on the contract mechanism to uphold the otherwise-provisions of a bylaw amendment.The company law of 2005 ignored the above-mentioned differences. In practice, minority shareholders’ fundamental rights are often limited or deprived by amendments of bylaw. Legislation and judicature should pay attention to such problems. Shareholders should not submit to otherwise-provisions of a bylaw amendment unless their own consent. Furthermore, the otherwise-provision itself should be effective before it can be applied. It should follow the principle of equality between shareholders, and so on. |
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