Research On The Pre-emptive Rights Of Shareholders

As one of the main forms of modern enterprises, the limited corporation is characterized as combining the cooperation of labor and capital. The cooperation of labor in the limited cooperation renders a specially reliable and cooperative relationship among the shareholders. However, with the development of market economy, the flows of various resources become more frequent, while the types of the trading of property right are increasing as well. The establishment of pre-emptive rights for shareholders is to maintain the expected benefits when they joined the company and to keep the previous management mode to the greatest extend when the shareholders of the limited corporation transfer their shareholding. The pre-emptive right of the shareholders is the specific application of the pre-emptive rights system in civil law. It is a typical example of the integration of civil law and the commercial law. In judicial practice, more and more disputes arise out of the shares transferring. Thus, it is necessary to study the pre-emptive rights of shareholders theoretically.This paper consists of five parts:In the first part, the basic theory of the civil law would be used to analyze the legal nature of the preemptive rights. Then the discussion would focus on the existent issue that the pre-emptive right of shareholders is the right of application, the right of formation, the right of formation with special conditions and the right of expectation. The personal views would also be given. This chapter would provide theoretical basis for this paper. In the second part of this chapter, this paper would analyze the value of this right from the perspective of the science of the law, economics and the science of administration.The second part discusses the condition of the exertion of the pre-emptive rights of shareholders, including the condition of prerequisite, the condition of subject and the time of exertion of this right, especially, the equal condition by analyzing the company law of people's republic of china article 72 and foreign legislation experience. In this section, the importance is the subject condition and equal condition. This part would discuss the subject condition logically and theoretically with personal viewpoints. The real conditions of pre-emptive rights of shareholders are the key part of this section. Discussion of articles begins with the content of"condition","equal condition", and the way of defining the"equal condition"at the auction procedure. Moreover, this part would point out the inadequacy of the company law, and issue some legislative proposals.The third part mainly discusses exertion of the pre-emptive rights of shareholders in the special situation. This chapter consists of three sections. The first section would concentrate on the contradiction between the company regulations and the company law when there are different regulations as shareholders transfer share externally. In the second section, we would discuss the issue of the partial exertion of the pre-emptive rights. Finally, we are going to discuss whether it can be exerted if there are only two shareholders by making a reference to foreign legislation.The fourth part mainly studies how to relieve when the pre-emptive rights are violated. First of all, we would discuss the effect of a contract between the shareholder who transfer the share and non-shareholder when shareholder violates pre-emptive rights. And then it follows by discussing the suit proceedings.The fifth part tries to solve the problem that shareholders firstly claim the pre-emptive rights but then give up buying the share. This paper is trying to confirm the validity of contract of the share transferring which has never gone through the procedures of share transfer from the angle of the company law, the regulations of the people's republic of china on administration of registration of companies and the contract law. Then we can ascertain its liability for contracting negligence or precontractual liability.