As an endogenous micro-institutional arrangement, corporate governance in China
has a different initial state and restriction conditions from those in developed countries.
The development of corporate governance in China is an artificial and mutation
process but not a natural transition process with the development of modern
corporations.
Overall, the quality of the annual general shareholder meeting is unsatisfactory. On
the one hand, the meeting cannot really carry out its full statutory rights. In fact,
important decisions, such as determining the compensation of directors, corporate
mergers and acquisitions, are in hands of the board of directors or chairman of the
board. On the other hand, there are lots of restrictions on proposition right of the
conference. Furthermore, the board of directors is in the hands of state-owned large
shareholders. As a result, there is a serious insider control problem in Chinese-listed
companies. Also, the board of directors in China is short of independence, and it is
dominated by the insider managers.