Discussion On The Issue Of Silent Investment In Limited Liability Company

In market trade and economic relationship, the phenomenon that the principle in name is separated from the interests of action, always causes kinds of confusion and unfairness by breaking the balance of interests of each party. The phenomenon of setting up a Limited: Liability Company by silent investment is such a model that constantly brings arguments. In real economic life, there are economic guiding policies about differential treatments to different investors and governmental market control. So some investors, driven by interests, take all kinds of ways to hide their real identities by using other peoples'names and identities to invest. And that makes the phenomenon of silent investment and silent shareholder become more and more popular. Up to now, there is no integrated, reasonable resolution and judgment guideline about how to correctly deal with all kinds of disputes arising in silent investment in judicial circles. Moreover there are many arguments about the character of these disputes and their control methods in the academic circle. This situation not only affects each party in identifying its own rights and obligations, but also challenges the integrity and authority of our judicial system in dealing with such disputes. The purpose of the article is to find methods for handling and decreasing the disputes of silent investment, by further analyzing the root of the generation of silent investment in Limited Liability Company and the substance of legal relationship between each party of the dispute.This article is divided into five chapters. Chapter One and Chapter Two conclude the types of"silent investment"by introducing the generation of the phenomenon of"silent investment"in Chinese limited liability company. Moreover, by clarifying the concept of"silent investment"in Limited Liability Company, the writer does further research and finds the reasons for the generation and increase of silent investment. Basically the reasons are as follows: (a) The subjective factors that the investors pursue profit maximization, (b) The objective factors of governmental policies arrangements about market support and incapable supervision, (c) The law functions of anticipation and evaluation about silent investment are absent.The following three chapters are the main body of this article. Firstly, following the discussion in Chapter One and Chapter Two, the writer introduces and concludes the disputes of silent investment in Chapter Three. Then the writer discusses the concept and character of the creator of silent investment–silent shareholder (silent investor). The writer states the different status of silent shareholders in different types of silent investment, concentrating on the identity of silent shareholder as a central party. The writer emphasizes that the substance of the legal relationship between silent shareholders and registered shareholders in contract silent investment is silent agent relationship. In the last section of this chapter, according to what have stated before, the writer presents the basic principle of identifying the qualification of shareholders in silent investment, the specific rules for identification in different types of silent investment and the application of silent agent system for identifying the qualification of shareholder in contract silent investment.In Chapter Five, the writer expresses his opinion and advice of regulating the silent investment in the limited liability company by law. After expressing the opinion of the disposal principle and classification regulation on silent investment disputes except the disputes of identifying the qualification of shareholder, the writer gives the claim and particular reasons of the disapproval of setting up silent investment system by legislation. However, it doesn't mean that silent investment shall not be regulated by legislation. Therefore, in the last section of Chapter Five, the writer demonstrates in details specific feasibility advices and the necessary of reducing silent investment phenomenon and settling the disputes of silent investment as well as regulating the silent investment conduction by the methods of law and market.