On Equity Interest Enforcement Of Limited Liability Compang

Equity interest means a shareholder's transferable rights of participation in a company's affairs and enjoying property interest herein which are obtained due to capital contribution and according to the rules and procedures prescribed in law or Articles of Association. Transfer of equity interest refers to a legal transaction that a shareholder transfers his equity interest in whole or in part to other shareholders or any third party other than other shareholders in accordance with conditions and procedures set forth in law.Enforcement of equity interest means an enforceable transfer measure taken by people's court, imposed on shares the executed shareholder takes in a company according to the creditor's application and effective judgment. It is thus clear that the process of equity interest enforcement is the process where people's court, by virtue of coercive force of stat, forcibly transfers the indebted shareholder's capital interest to any third party according to legal conditions and procedures.The conditions to enforcement of equity interest mainly include the following.1. Material conditions ,The shareholder, the executed, has no other assets for enforcement, or such other assets are not sufficient to repay the debt in full even after enforcement. Enforcement must ensure preemptive right of other shareholders. Enforcement may not violate the principle of maintenance of capital.2. Procedural conditions , There must be relative legal grounds for enforcement. Obligation of notification must be performed. Enforcement must be confined to the amount determined in accordance with legal grounds. The value of interest to be transferred must be appraised. Auction shall be first choice for stock transaction.At present, there exist many deficiencies in relative stipulations about enforcement of equity interest in a limited liability company, which has resulted in many obstacles in court's practical enforcement. This paper puts forward relative legislative proposals from four aspects ----- subject of equity interest transfer in a limited liability company, restrictions on transfer among shareholders themselves, improving preemptive right and remedies, the system of equity interest gift, in order to contribute to perfect the system of equity interest enforcement.