Study On Withdraw Of Shareholders In China-Foreign Joint Venture

For a long time, Chinese-foreign joint ventures are a prominent form of utilizing foreign capitals, which make a huge contribution to our economic growth. Nevertheless, for the reason of Chinese-foreign ventures'nature and rather rigid regulations enforced by authorities in comparison with other normal limited liability company, Chinese-foreign ventures reveal much closer characteristic and the more personal nature, leading to a higher threshold for shareholders to withdraw from company. Besides, Chinese-joint ventures'pattern of inner cooperate governance is particular, which doesn't set up shareholder meeting and endows board of directors with the supreme power. Board of directors exercises dual powers which are respectively owned by board of directors and shareholder meeting in normal liability company, which result in shifting responsibilities and low-efficiency. In practice, during the negotiation on joint ventures, the power of appointments of chairman and general manager are belonging to both parties respectively, and it will likely to cause a phenomenon that the general manager ignores board of directors as companies'highest organ and is directly obedient to one party who appointed him. All of above are easy making Chinese-joint ventures fall into"company deadlock", and once deadlock happened, as Chinese law and regulations are old and irrational in some degree, the shareholders fall into dilemma.The shareholders not only withdraw from company initiatively, but also passively. The foreign-joint ventures had gradually passed their booming age after their growths and developments. For many reasons, foreign investors tend to invest in China by establish a sole owned company. Many Chinese-foreign joint ventures established before have suffered share change and become foreign investor sole owned companies. During the change, the shareholders may be squeezed out of company by some ways, shareholders'rights (especially Chinese shareholders ) and national economy safety are need our concerns.This article is from the angle of both initiative and passive withdraw, with theoretical research and case analysis combined, exploring a Chinese-foreign joint venture partner withdraw mechanism defects and the way to improve, so as to make our country's Chinese-foreign joint venture enterprise system become much more in line with the new situation and the new demand. On the structure of text, this paper will be divided into four parts.The first part is overview about Chinese-foreign joint venture withdraw mechanism. This part will first analysis the concept of shareholder withdraw and classify shareholder withdraw, which will set a scene for following text. Then the part of the content is analysis of features of Chinese-foreign joint venture shareholder withdraw mechanism and points out the two important characteristics: namely the difficulties of shareholders initial withdraw during the company existing period and administrative organs intervene process of Chinese-foreign joint venture shareholder withdraw.The second part is argument on value of Chinese-foreign joint venture shareholder mechanism. This part is not from the traditional angle but to analyze the limited liability company essence of Chinese-foreign joint ventures as well as transnational investment philosophy. Point out the value of Chinese-foreign equity joint ventures shall be analyzed under combination of limited liability company essence and multinational investment philosophy. The third part is concrete analysis on Chinese-foreign joint venture shareholders withdraw, which includes initiative and passive withdraw this two parts, and finally points out the existing deficiencies of mechanism.The fourth part is suggestion on improvement of current Chinese-foreign joint venture shareholder withdraw mechanism. In order to echo the third part, this section is also divided into of initiative withdraw recommendations, and passive recommendations.Through the arguments below, I demonstrated that the current Chinese-foreign joint venture shareholder withdraw mechanism is badly in need of improvement, for the reasons of its old Chinese-foreign joint venture legislation that compound the both investment law and enterprise law which lead the inconsistence between joint-venture legislation and enterprise law and Chinese-foreign joint venture has tended marginalized, improvement of current mechanism will not only comply with the development trend but also can protect the lawful rights and interests of the shareholders in passive withdraw and our national economic security.