Studies Of Legal Issues On Equity Transfer Of Limited Liability Company

The limited liability company (CO, LTD for short) has won domestic legislation’s favorsince its birth in unique form. Then it rapidly developed into an important business organization.It combines two advantages of human resource integrity and capital integrity after itsestablishment with a unique form of value more than100years later. On the one hand, it hasinherited the advantages of less legal regulations and flexible management structure of traditionalforms of medium and small enterprises. On the other hand, it has broadened the scope ofapplication of the shareholder’s limited liability principles, thus investors in medium and smallenterprises will be protected by limited liability.Equity is the basic element of the entire company, and an important element of company law.Company’s equity has capital and commercial quality, so equity transfer plays a very importantrole in optimizing the allocation of resources and maintaining stability and safeguardingshareholders ’ interest of the company.People’s Republic of China company law (company law for short) was largely revised in2005, in which specific provisions of equity transfer of limited liability company has been made.Due to the changes in the real situations and different solutions that judicial practice personnelmade about the problems, defects, unclear regulations and not detailed explanations still remain.These problems not only bring adverse effects for the harmonious development of the communityand good order of the community and dissemination of legal justice, but also could undermine thelegitimate rights of shareholders. Based on the enormous influence on equity transfer, the researchon equity transfer system of limited liability company system is necessary.This paper has four parts to analyze the related legal issues about equity transfer of limitedliability company. Part one is an overview of equity and equity transfer. At first it distinguishesthe scientific concepts involved in equity transfer, and focuses on analysis of the legal nature ofequity and equity transfer, in order to achieve the overall outline of this paper.Part two analyzes the equity transfer system of limited liability company in China and itscurrent situation. Equity transfer of limited liability company is generally divided into threecategories: equity inside-transfer, external transfer and special forms. It discusses partly the threeequity transfers about their overview, procedures, and problems in practice, in order to achieve deep analysis and research. Besides, by the way of collected text data and survey information,new problems are extracted from the generalization that equity transfer of limited liabilitycompany in China faces about state equity transfer and equity transfer of rural cooperatives.Part three brings up some constructive comments on perfecting equity transfer system oflimited liability company, for solving the defects in the legal system and the new forms ofproblems in practice appeared in part two.Part four proposes relevant solutions of the problems that arising in equity transfer ofstate-owned enterprises and medium and small enterprises after learning the domestic andinternational experiences and lessons. The measures are stated through conditions of equitytransfer, procedure and subsequent management.