On The Preemption Right Of Equity Transfer Of Limited Liability Company

The shareholders’ preemptive rights of a limited liability companyare prior rights to purchase shares from other shareholders before offeredto the third party, on equal terms according to the company law orshareholders agreements.However the shareholders’ preemptive rights arenot well protected due to the ambiguousclause, the lack of operationalprocesses and detailed standard in the company law where the preemptiverights are formulatedWith regard to the personal combination of the limited liabilitycompany, the shareholders’ preemptive rights are very important for theprotection of personal combination and confidence, which have seriousimpacts on the company and shareholders.In particular, the legal nexuswill be more complicated because of the interposition by the third partywhen the shares are offered. It is not only a theoretic question but alsoan urgent practical one to define the rights and obligations for eachinterested party and to virtually resolve the consequent disputes. Thisarticle has raised questions from three representative cases, trying todiscuss the practical problems of the preemptive rights, combined withother relative theory and practical experiences based on the preemptiverightstheoretic basis It contains three parts:The first part has introduced the basic theory of the shareholders’preemptive rights of the limited liability company. Summarize and analyzethe representativetheoreticviewpoints of the preemptive rights, whichwill be the theoretic basis for discussing the situations of infringementand judicial remedy.The second part has introduced the realization of the preemptiverights and the legal effects of the share transferring agreements inbreach of the restriction condition. At first, this article hasascertained in which situation it brings the preemptive rights and has defined the preemptive rights’ time limit and the meaning of“coequality” from the variety academic viewpoints combined withpractical situations, analyzing the exercising subject, time limit andthe meaning of “coequality” based on the exercising rules of thepreemptive rights. Second, this article has neatened the exercisingprocesses of the preemptive rights, anatomized some special situationsin reality, the legal effects of silent response and other situations ofpartly exercising preemptive rights, for example.The third part has introduced several infringement situations of thepreemptive rights, analyzed individually to find ways of judicial remedyaccording to the actual judicial decision.