Study On The Repurchasing Shares Systerm Of The Limited Liability Company

To ensure the company’s normal operation, the company should maintain a considerable amount of capital as its registered in the process of operating. As long as the act of repurchasing shares doesn’t reduce the company’s registered capital, it will not have conflict with the principle of maintaining capital. After the investor being one company’s shareholder, he has three ways to lift the relationship with the company, that is transferring equity, the company repurchasing his shares and dissolving the company. Due to the co-personal and closed features of the CO., LTD its shares can’t be transferred freely in the public place like equity shares of the company. And in order to maintain the trust relationship between shareholders, the CO., LTD usually sets stricter limits on the equity transfer in the practice. The way of company dissolution is not perfect because of its high cost. Therefore, the way of the company repurchasing shareholders’equity becomes the best choice for lifting the relationship between shareholders and the company.According to the way of share buyback, share repurchasing of the limited liability company can be divided into two categories, active share buybacks and passive share buybacks.They all have their own independent and irreplaceable value. The company’s initiative share buyback is based on the company’s benefit, but passive share buyback is from the perspective of shareholders, whose aim is to provide a protection plan for the shareholder s’ rights. Unfortunately, in our current "company law", there is only provision for passive repurchasing shares of the limited liability company, but no provision for active share buybacks. That means there is a loophole in the system.The current "company law" provisions on dissent shareholders equity repurchase claims system have obvious defects:(1) Insufficient procedure. At present, our country’s medium small and micro-sized enterprises have only 2.9 years’life averagely. Under these circumstances, it is not unrealistic to set that provision which requires shareholders vote against the shareholders’ committee for five consecutive years. Only that, they can exercise the dissenting appraisal right.(2)the standard of determining reasonable price standard is not clear;(3)there is no limit on the resources used to repurchase equity;(4)the procedure exercise program is too simple to ensure the implementation of substantive rights conclusively.We can find some substances in section 4 of article 71 of our current company law and in some relevant judicial precedents for the active repurchasing equity system of the CO., LTD, but that’s still not clear enough. In the last part of the article, the research is mainly about the share buybacks system of the limited liability company in China on the aspects such as repurchase reason, financial resources, the repurchase price, ban conditions of share buyback, which the German limited liability company’s share buyback system will be referenced.