Preliminary Study On Judicial Dissolution System

The system of judicial dissolution of a company has a long history inwestern countries since the British court enacted an order of winding up acompany on the basis of fairness and reasonableness as early as in themiddle period of the 2.0th century. The system plays an important role inresolving corporate dissension, breaking corporate deadlock andprotecting the interests of minority shareholders. However, judicialdissolution has not been regarded as a cause for corporate dissolution inChina's original Corporation Law passed in 1994. And therefore thecourts universally showed a passive attitude toward the lawsuit of judicialdissolution by shareholders, which resulted in great damage of theinterests of shareholders, especially those of the minority shareholders.Fommately, the new Company Law of China, which came into effect in1th, Jan 2006, imported the system of judicial dissolution for the firsttime. Sec. 183 of the law definitely prescribes that, shareholders can bringa suit of judicial dissolution of a company on statutory situations. However, as every system has its own special ground, a good system inother countries will not necessarily exert the same effect in China. Instead,it probably will lead to the extremeness of abusing judgment authority. Asa result, the author tried to explore the theoretical foundation of judicialdissolution system, and made some comment on the system in china'snew company law on the basis of the theory and the practice of othercountries. The author hoped that her preliminary study will make somecontributions to better application of judicial dissolution system in China.The article mainly consists of the preface, the main body and theconcluding remarks. The preface makes a general introduction to thedevelopment of judicial dissolution system in china, and points out theresearch purpose and content of this article.The main body is composed of four chapters:Chapters 1 introduced the concept, category and some other basicissues of judicial dissolution system, and restrict the scope of the articleintojudicial dissolution only brought about by shareholders. What's more,the author analyzed the value of the system from opposite perspectives.Chapter 2 analyzed the theoretical foundation of the judicialdissolution system. Firstly, through analyzing the relationship betweencorporate autonomy and judicial intervention, the author established thelegal foundation for judicial dissolution. Secondly, on the basis of thetheory of corporate contract, the author elaborated the flaw and remedy of the theory and analyzed the theory of reasonable expectations derivedfrom corporate contract theory, which provide an economic analysis ofthe justice of judicial dissolution system. Finally, considering the specialcharacteristics of the closed company, the majority rule is not suitable forthis type of company, and the dissimilation of the rule should be rectified.Judicial dissolution is regarded as one of the effective measures.Chapter 3 compared the practice of judicial dissolution in othercountries, especially that in America, and made an objective analysis. Inparticular, the author analyzed deeply some arguable issues such as thequalification restriction of the plaintiff, the standard for measuringshareholder oppression, court-imposed stockholder buy-out and so on.Chapter 4 retrospect the process of judicial dissolution system inchina, and proposed some advice on the improvement of the judicialdissolution system in the framework of china's new corporate law.At last, on the basis of the hereinbefore research, the author putforward that the essence of judicial dissolution system is to achieve thebalance between corporate autonomy and judicial intervention, betweenmajority shareholders and minority shareholders, between individualrights and group rights and so on. In a word, the system aims to achievethe balance between fairness and efficiency.This thesis has three features on research method. First, the authorelaborated on topics which are controversial in theory and practice, while skips over those she thought are less important. Second, the paperanalyzed, large quantity of foreign reference literatures, which elaboratedopposite opinions. These opposite opinions helped the author knew thedevelopment trends of relational systems directly and deeply. Third, theauthor applied a variety of research methods such as comparative analysis,historical analysis, case analysis, and economic analysis.