Rich Dad’s Financial IQ Cultivation: Stock Fundamentals

Chapter 6 Basic knowledge of joint-stock companies (2)
In terms of function, the general meeting of shareholders is a place and a tool for shareholders to express their will, interests and exercise their power.Because the joint stock company is established based on the property investment of the shareholders, the shareholders are therefore de facto and legal owners of the company.As an owner, he can exercise voting rights on issues he is entitled to vote in accordance with the law and participate in a major decision-making of the company.However, it is impossible for all shareholders to directly participate in management. Their power can only be realized by participating in the general meeting of shareholders (if there are too many shareholders, the general meeting of shareholders can be elected by shareholders), participating in voting on company-related resolutions and electing the company's board of directors.

From the perspective of power and status, the general meeting of shareholders is the highest authority of the company. It has the power to decide the most important matters of the company, and has the power to elect directors, form members of the board of directors and other organs, remove relevant members, and investigate the responsibility of organs and members.

From the perspective of nature, the general meeting of shareholders is only an organ of power, which determines the operation and development of the company according to the will of shareholders. It is not a representative organ, cannot represent the company externally, nor is it an executive organ, and does not perform business internally.

The main functions and powers of the general meeting of shareholders include:
(1) Hear and review the work reports of the board of directors and the board of supervisors;
(2) Election and removal of directors;
(3) Election and removal of members of the board of supervisors;

(4) Amending the articles of association of the company;
(5) Review the company's financial budget and final accounts report proposed by the board of directors;

(6) Review the accounting books prepared by the board of directors;
(7) Make resolutions on major events such as the increase or decrease of the company's share capital, merger, dissolution, liquidation, etc.;

(8) Make resolutions on other important matters of the company.

Regarding the general meeting of shareholders, there are several legal issues as follows.

(1) The general meeting of shareholders is generally held once a year, and should be held within one year after the end of each fiscal year.When necessary, the company may also hold an extraordinary shareholder meeting.The content of the extraordinary meeting, that is, under what circumstances and which types of issues can be discussed and resolved through the extraordinary meeting, should also be stipulated in the company's articles of association.In principle, the general meeting of shareholders is convened by the board of directors of the company.The notice of the general meeting of shareholders shall be sent in written form to each shareholder with voting rights within a sufficient time before the meeting.

(2) The attendees of the general meeting of shareholders should generally be the shareholders themselves.Shareholders can also entrust their proxies to attend the general meeting of shareholders. A power of attorney should be issued when entrusting the entrustment. A shareholder can only entrust one proxy, but one proxy can accept the entrustment of multiple principals at the same time and exercise power on their behalf.

(3) Voting at the general meeting of shareholders can be done in the form of meeting voting, but the requirements for voting: First, shareholders representing the majority of issued shares must attend the meeting, that is, the total number of shares represented by shareholders present at the meeting accounts for half of the total number of issued shares The above; second, there must be a majority of shareholders present at the meeting to vote and agree, that is, the number of voting rights that agree accounts for more than half of the total number of voting rights present at the meeting; third, the basis for shareholder voting is the number of shares.One vote per share, not one vote per shareholder.

[-]. Board of Directors
The board of directors of a joint-stock company is elected by the general meeting of shareholders. It is a permanent body that exercises the functions and powers of the general meeting of shareholders when the general meeting of shareholders is not in session. It is responsible for handling various major business and management matters of the company.

As the company's board of directors, its formation has specific requirements in terms of qualifications, quantity, and work arrangements, as well as its specific scope of responsibilities:
(1) In terms of qualifications, each member of the board of directors must be a director.Directors are elected by shareholders at a general meeting of shareholders.All directors form a collective leadership team called the Board of Directors.The statutory director qualifications are as follows: First, the board of directors can be a natural person or a legal person.If a legal person acts as a company director, it must appoint a competent natural person as its agent.Second, persons with special occupations and incapacity cannot be directors.Special occupations such as national civil servants, notaries, lawyers and soldiers.Third, directors may or may not be shareholders.

(2) In terms of the number of directors, the number of directors must not be less than the statutory minimum, because the number of directors is too small, which is not conducive to brainstorming and fully concentrating shareholders' opinions.However, the number of people should not be too large to avoid overstaffing and reduce work efficiency.Therefore, the company may determine the number of directors according to business needs and the company's articles of association above the minimum limit.Since the board of directors is a conference body, the final number of board members is generally an odd number.

(3) In terms of personnel division, the board of directors generally has a chairman, vice chairman, and executive director.A company with a large number of people may also establish a standing board of directors.The chairman and vice chairman are elected by more than half of the board of directors, and the removal procedure is the same.

(4) The functions and powers exercised by the board of directors mainly include: implementing the resolutions of the general meeting of shareholders; deciding to convene the general meeting of shareholders and reporting to the general meeting of shareholders; reviewing and approving the company's development plan, annual business plan, annual financial final accounts, profit distribution plan; election , Supervise and dismiss the company's principal and deputy general managers (managers) and other senior staff of the company; other functions and powers stipulated in the company's articles of association.The relationship between the board of directors and the general meeting of shareholders is: both of them exercise all the powers owned by the company, but the general meeting of shareholders separates or delegates decision-making and management powers from the general meeting of shareholders.The resolutions made by the board of directors must conform to the resolutions of the general meeting of shareholders. In case of conflict, the resolutions of the general meeting of shareholders shall prevail; the general meeting of shareholders may veto the resolutions of the board of directors, up to reorganization and dissolution of the board of directors.

(5) In the board of directors, the chairman has the greatest authority.Is the chairman of the board.Mainly exercise the following functions and powers: first, to convene and preside over board meetings; second, to exercise the functions and powers of the board of directors during the adjournment of the board of directors, to supervise and guide major issues in business execution; The power to litigate, the power to sign major agreements, etc.

[-]. Board of Supervisors
The board of supervisors, also known as the company supervisory committee, is a legally necessary supervisory organ of a joint-stock company. It is an internal organization that is set up side by side with the board of directors under the leadership of the shareholders' meeting to exercise supervision over the board of directors and the general manager's administrative management system.

(1) The purpose of establishing the board of supervisors.Due to the scattered shareholders of the company, there are great differences in professional knowledge and ability. In order to prevent the board of directors and managers from abusing their powers and harming the interests of the company and shareholders, it is necessary to elect such a special supervisory agency at the general meeting of shareholders to perform supervisory functions on behalf of the general meeting of shareholders.

(2) Composition of the board of supervisors.The board of supervisors is composed of all supervisors.The qualifications of supervisors are basically the same as those of directors and must be elected by the general meeting of shareholders.Supervisors can be shareholders, company employees, or non-company professionals.The category of its professional composition shall be specified in the company law and the articles of association of the company.However, the chairman, vice-chairman, director, general manager and manager of the company shall not concurrently serve as members of the board of supervisors.The board of supervisors shall have directors, deputy directors and members.

(3) The terms of reference of the board of supervisors are as follows: first, it can investigate the company's production, operation and financial status at any time, review account books, statements and documents, and request the board of directors to submit a report; Shareholders' meeting; third, to attend board meetings as non-voting delegates, to raise objections to resolutions of the board of directors, and to request reconsideration; fourth, to propose dismissal and punishment to the company's managers at all levels.

[-]. Manager

A manager is a person in a company who has internal business management authority and external business agency authority.Its function is to assist the board of directors and other statutory business executive organs to implement the company's specific business, that is, to implement the resolutions of the board of directors.

A joint-stock company determines the number of managers according to business needs and the company's articles of association.Such as 1 general manager, 2-3 deputy general managers.Several department managers.The general manager and deputy general manager are elected by the board of directors.The general manager may or may not be a shareholder, may be full-time, or concurrently served by the chairman or vice-chairman.However, regardless of whether the general manager or deputy general manager is a shareholder of the company, they must attend the meetings of the board of directors.

The general manager is the manager in charge of the company's overall business activities, has the right to exercise overall control over the company's affairs, and engages in daily business transactions on behalf of the company, and has overall responsibility for the efficiency and results of business activities.The general manager, as the chief executive of the company, is entrusted or recruited by the board of directors.By convention, he should be a member of the company's board of directors.

The specific duties and responsibilities of the general manager include:

(1) Implement the resolution of the board of directors, determine the company's major policies in accordance with the resolution, and study and formulate specific measures;

(2) Determine the internal organizational structure and arrange personnel for each functional department;
(3) Authorized by the board of directors to sign contracts and handle business on behalf of the company;
(4) Regularly report the business situation to the board of directors, and submit an annual report to the board of directors;

(5) recruiting or dismissing company employees;

(6) Host the daily business activities of the company.

The deputy general manager is the deputy of the general manager.When the general manager is unable to exercise his powers for some reason, he can authorize the deputy general manager to perform his powers on his behalf; under normal circumstances, he will assist the general manager to take over the business of the company.

Each department manager is in charge of the work of a department.Or in charge of a certain business work, such as financial manager, sales manager, development manager, project manager, etc.

(Section [-]) How joint-stock companies reorganize and merge
[-]. Reorganization of joint-stock companies
When the company has serious financial difficulties or is in danger of bankruptcy, in order to maintain the existence of the company and revitalize it, and protect the interests of shareholders and creditors of the company, the suspension of business and reorganization conducted by the court is called the reorganization of the company in law.

公司重整必须向法院提出申请。具有申请人资格的为本公司的或者连续6个月以上持有已发行股票10%以上股份的股东，或者拥有相当于公司已发行股份总金额10%以上的债权的公司债权人。重整申请书应包括以下内容：（1）公司的基本情况及其文本；（2）申请重整的原因及根据；（3）公司的经营范围与业务状况；（4）公司的资产负债、损益及其他财务状况；（5）关于重整的意见；（6）申请人的姓名、住址及申请资格。

When the company has decided or announced bankruptcy, the company has been dissolved, the company has no operating value, and the company has not disclosed its financial affairs, etc., reorganization shall not be carried out.

法院在接到公司重整的申请书后，在裁定之前，可先采取以下措施：（1）冻结公司财产；（2）限制公司业务；（3）限制公司行使债权或履行债务；（4）中止公司破产、和解或强制执行等程序；（5）禁止股票转让和发放债券；（6）停止有关管理人员的调动，冻结有关人员财产。

The court shall investigate and verify the business property of the company before ruling.If the company's reorganization application is approved, the company can be ruled to reorganize.After the reorganization ruling is made, the court needs to take the following measures: (1) issue a reorganization ruling and notify the competent authority; (2) appoint a reorganization supervisor; (3) appoint a reorganization person; (4) announce the liquidation Announcement, served on shareholders and full holders.

The company reorganization takes legal effect as soon as the court makes a ruling.

If the court does not approve the company's reorganization application, it may reject the company's reorganization application for the following reasons. (1) The application procedure is illegal; (2) The company has not publicly issued stocks or corporate bonds in accordance with the law; (3) The items listed in the application are not true; (4) The company has no business significance.

During the reorganization period of the company, the power of the company is transferred to the reorganizer, and the functions and powers of the general meeting of shareholders, the board of directors, and the board of supervisors are suspended. Apply to the court for a ruling after reorganization.

The reorganizer is appointed by the court, usually a director, but when the court deems it inappropriate, it can be appointed from creditors or shareholders.

The person appointed by the court to supervise the reorganization person to perform the duties of reorganization is the reorganization supervisor.The reorganization supervisor has the power of supervision, the right to convene the meeting of related parties, and the right to apply for dismissal and reorganization.

The meeting of related parties is the statutory deliberative body formed by the reorganization creditors and shareholders to participate in the reorganization process, and is the highest authority in the company's reorganization.The first meeting of related parties shall be convened by the decision of the court, and subsequent meetings of related parties shall be convened by the reorganization supervisor, who shall serve as the chairman of the meeting during the meeting.

Reorganization creditors and shareholders are reorganization related parties, and should attend the related party meeting, reorganizers attend the meeting, and accept consultation on reorganization issues.The main contents of the related party meeting are: listening to the reorganization report, deliberating and voting on the reorganization plan.

The reorganization plan is drafted by the reorganizer, together with the company's business and financial statements, it is submitted to the meeting of related parties for review.After being approved by the meeting of related parties, it shall be reported to the court for review.

重整计划包括的内容有：（1）债权人及股东权利的变更；（2）经营方法的改变；（3）财产的处置；（4）债务的清偿方法及资金来源；（5）资产估价标准；（6）公司改组及章程变更；（7）职工的裁减与调整；（8）股票与公司债的发行。

The reorganization plan shall be executed by the reorganizer under the supervision of the reorganization supervisor.If an illegal act is found during the reorganization process, the reorganization supervisor may apply to the court to remove the reorganizer from his post and appoint another person.

After the completion of the reorganization plan, a general meeting of shareholders shall be convened to announce the completion of the reorganization and report to the court for a reorganization ruling.

After the completion of the reorganization, the following effects will be produced: (1) The part of the creditor’s rights that have not been paid off will be automatically eliminated unless it is transferred to the reorganized company according to the reorganization plan; (2) The shareholders’ equity will be changed or reduced after the reorganization. (3) The company's bankruptcy, reconciliation, enforcement and lawsuits arising from property relations before the reorganization ruling are invalid.

[-]. Merger of joint-stock companies
The merger of companies refers to the merger of two or more companies into one company in accordance with legal provisions or contractual agreements.The merger of the company generally adopts two methods: one is merger by absorption; the other is merger by new establishment.Merger by absorption means that during the merger process of two or more companies, one of the companies continues to exist, while the other companies belong to the former company after their original legal personality is eliminated.New establishment merger means that in the process of merger, all companies participating in the merger eliminate their original legal personality and form a new legal entity.

The merger of joint-stock companies will directly affect the companies participating in the merger and their shareholders and creditors.

When merging, sometimes the mergers are all active; sometimes there are both active and negative mergers.For the positive, the purpose of the merger is: (1) to reduce competitors; (2) to develop collaboration and diversification, and quickly open up the market; (3) to accelerate the expansion of the company's scale.

For passive partners, the purpose of merger is: (1) to avoid bankruptcy when it is unable to operate; (2) not willing to continue to operate, but to avoid paying high costs of dissolution and liquidation; Consolidate and reduce risk.

If the company is dissolved due to merger with other companies, the board of directors shall notify all shareholders of the main content of the merger and dissolution, and if there are bearer shareholders, it shall also issue an announcement.At the same time, the board of directors shall notify or make an announcement to each creditor separately, designate a time limit of more than three months, and state that creditors may raise objections within the time limit.When amalgamating, the board of directors must fabricate balance sheets and inventories.

(End of this chapter)