On Claim Of Right Of Dissent Shareholders In LLC For Share Repurchase

The economic development and market dynamics under the current socialbackground are affecting the development trends of companies at all times. And at thesame time, as the main form of enterprise organization that is widely adopted bycurrent developed countries with advanced commodity economy, the limited liabilitycompany (LLC) plays a huge role in promoting the economic development and socialprogress. Thus this brings a new subject for modern company law. The task ofcompany law not only lies in regulating the behavior of the company to optimize themarket environment, but also lies in how to improve and perfect the system to makethe system realize the improvement of the company’s operating efficiency and furtheraccomplish its significant mission to promote the social and economic development.So at this point, it seems particularly important for the design of system for thecompany law whether to conform to the social status, whether to promote theinvestment on social scattered funds and whether to bring a positive and active impacton the development of economy. The system of right of claim of dissent shareholdersfor share repurchase has won the wide and great attention by scholars before thestipulation on its application in China and some scholars constantly stand up to appealto China to cite this system from the perspective of maintaining the interests of smalland medium-sized shareholders. But after the formal transplantation of the system,the provisions of the company law on this system is not so perfect and so mature. Theprovisions pay too much attention to principles and lack operability as for the subjectof application and applicable situation for the claim of right of dissent shareholdersfor share repurchase. At the same time, they are also in lack of the matching judicialproceedings with the system and as a result, they are criticized by many scholars.Meanwhile, these disadvantages and drawbacks are also totally obvious in all types ofcases that are judicially applicable. Most of scholars for the company law attempt tocarry out analysis and discussion on the system of claim of right for foreign sharerepurchase, such as Germany’s judgment procedure and cash option system in the field of financial investment. They try to give more details, improve and supplementthe current provisions in our country. But their opinions vary and each sticks to hisown argument, without a conclusion. Therefore how to perfect this system and givemore details on it with the purpose of making it have practicability and operability,achieving the original intention to design the system and further giving full play to itsrole has become one of the important subjects with which researchers on the companylaw are faced. This is also the key issue in this paper for its targeted research andthinking. This paper limits the research object to the claim of right of dissentshareholders in limited liability company (LLC) for share repurchase. And on thebasis of the analysis on cases for claim of right for share repurchase, it combs thetheory on the claim of right of dissent shareholders for share repurchase in LLC, doesthe contrastive analysis and provides bold vision on the specific applicable rules inthis system and tries to make great efforts to perfect the system.This paper can be divided into four parts.The first chapter takes the subject of the claim of right of dissent shareholdersfor share repurchase as a starting point and commences the analysis by this paper. Itdiscusses two subject factors that the subject of the claim of right for share repurchaseshould have: the identity qualification and the rewards for action completion. At thesame time, its discussion also aims at the special cases outside the general principlefor separate and in-depth discussion: whether the defective shareholders incontribution of capital, shareholders without voting rights and shareholders absent inboard of shareholders enjoy the claim of right for share repurchase and when either ofthose three has the claim of right for share repurchase.The second chapter and the third chapter are the main chapters in this paper. Thesecond chapter mainly discusses the applicable situation for the claim of right ofshare repurchase. Firstly it generalizes and analyzes the three applicable situationsthat are stipulated by Article74in China’s The Company Law. And through cases, itfinds out and puts forward the deficiencies of the existing provisions. At the sametime, it learns from the experience of relevant provisions in foreign company lawsand gives suggestions for the perfection of applicable situations in order to give fulland entire play to the functions and roles of the claim of right for share repurchase. The third chapter mainly discusses the legal consequences for the exercise of claim ofright for share repurchase and from two levels including that shareholders claim forrepurchase to the company and shareholders bring lawsuit to request the court for theconfirmation of share repurchase this chapter carries out its discussion. It alsoanalyzes the knotty problems that are possible to be faced for legal application undertwo kinds of circumstances. Finally, it discusses the handling of share repurchase andanalyzes the nature of repurchased shares the company holds as well as problems thatshould be paid attention to when handling the share repurchase.The fourth chapter discusses the restrictions on claim of right for sharerepurchase and analyzes the reasonable grounds for the restriction on the exercise ofthe right, namely under what circumstance the exercise of the claim of right for sharerepurchase should be limited. Meanwhile, it also brings assumptions on how to limitthe exercise of right and how to perfect the relevant provisions: on the one hand,when the company repurchases the share, the capital source for its repurchase shouldbe limited. At the same time, on the other hand, the system of the claim of right forshare repurchase should also include publicity system and creditor supervision systemto ensure that in the process of repurchasing the shares of dissent shareholders by thecompany, the interests of creditors will not suffer from the unnecessary and unfairencroachment.