Evolution of the Corporation and Shareholders' Role in China

While it seems that China's corporate system lags far behind that of Western developed countries such as the UK, the US or Germany, as early as 1904 China's first corporate law had been promulgated by the imperial government—the Qing Government—which included the rule of limited liability and equal treatment of shares, among others. So why has a mature corporate law system or a sound capital market failed to be established over a century later?This article focuses on the historical development of corporate forms in different stages and their respective features, as well as the main causes and effects. The modern and contemporary history will be divided into three distinctive periods: the late Qing Dynasty from 1860 to 1911; the Republican period from 1912 to 1948; and the People's Republic of China since its establishment in 1949, each distinctive period having differing phases during its own time. This evolution will be tracked in the first three sections. Then the picture of current shareholder rights in China will be briefly highlighted. After that, the article discusses lessons that can be learned from the evolutionary history in order to avoid similar mistakes in later developments. Finally, a conclusion will be provided