Research On Legel Issues Of The Defective Equity Transfer Of Limited Liability Corporation

Equity transfer is one way for shareholder to withdraw the company. Thedefective contribution shall not affect the shareholder to achieve the goal of withdrawthe company by equity transfer under the currently corporation law. It is a difficultproblem to consider every subject’s benefit when we set up the rule of responsibility,since defective equity transfer involves so many parties’ interest, includingshareholder, the company, the transfer and transferee, and the creditors of company.Unfortunately, it takes no quidditative breakthrough on the rule of defective equitytransfer of the new corporation law which amended in2005, is still focus on the ruleof defects of contribution. Facing many problems in judicial practice due to defectsequity transfer, such as the validity of the transfer contract, the identification of thecapital contribution obligations and how to assume the responsibility in differentsubjects, the existing Company Law does not specify clearly, there is also hugecontroversy between theory and practice. This paper takes a case of defects equitytransfer as an instance, through empirical research, and combined with the basicprinciples of company law, trying to have a research on influential elements,identification of the contract effectiveness and responsibility system construction indefects equity transfer. At the same time, to build supporting systems in regulation ofdefective contribution, such as defect correction mechanism, procedures in loss of theright of shareholders. Chapter one list two core issues of defective equity transfer from a typical case.The two core issues are the contract effectiveness of defective equity transfer and thestructure of liability system of defective equity transfer. The other part of Chapter onesummarizes the concept and type of defective equity, and make sure the existedproblem by explaining some special typical defective equity.The second chapter discusses the impact to the defective equity which produced bythe capital system, the influence to shareholder qualification and shareholder’s rightcaused by the defective contribution, and the effectiveness of principle of good faithwhen a person obtain or transfer the defective equity. The third chapterintroduces all kinds of theories on the validity of treaty of defective equity transfer,after analyzing these theories, the author put forward the view of it. Then the fourthchapter puts forward the construction of the responsibility assumption system ofdefective equity transfer, to define different responsibility assumption among differentsubject, and also define the sphere of application of different kinds responsibilityassumption which produced by defective equity. The fifth chapter introduces twokinds of cooperative systems, defect correction mechanism and the right denialprocess, to realize the purpose of prevention and relief in defective equity transfer.