Research On The Pre-emptive Rights Of Shareholders Of Limited Liability Companies

As the enterprise organization model between partnership and company limited by shares,Limited Liability Company has the characteristics of both the human joining and the assets joining.Because of its features of flexible establishment and organization,LLC shows unique charm and becomes one of the most extensive civil subjects in modern business society.Preemptive right of shareholders,the exclusive system of LLC,plays a significant role in maintaining stock right circulation,keeping the companies’ features of assets jointing and human jointing,achieving transaction safety and so on.However,this system has diverse problems and disputes in legislation and juridical practice,which has brought great challenges to its values and functions.This paper puts forwards problems from cases analysis,and discusses the basic theory and exercise of preemptive right of shareholders,the influence and relief of equity transfer contract’s validity.It analyses the flaws in legislation of preemptive right of shareholders system and comes up with own ideas.Hope the paper could help with legislation.The paper is composed of introduction,main body and conclusion.The introduction mainly shows the research background,purpose,current situation and method used in this paper.The main body includes five parts.The first part puts forwards several problems through cases introduction,arbitration award and court decision.The second part introduces the basic theory of preemptive right of shareholders,which includes the concept,value and function,legal nature of preemptive right of shareholders.The paper suggests that preemptive right of shareholders system considers the rights of the assignee in equity while maintaining LLC’s features of the human joining and assets joining.There are comprehensive views of the legal nature of preemptive right of shareholders in academic circles,including the right of claim theory,the expectant right theory,formation right theory,and conditional formation right theory.The author expounds the theory basis and merits of diverse theories.In author’s opinions,the theory of formation right is the most reliable theory.The third part is the core parts of the paper,which introduces the exercise of preemptive right of shareholders.The core of system is exercise.Based on article 71 in company law and articles concerning preemptive right of shareholders in Provisions of the Supreme People’s Court on Several Issues concerning the Application of the Company Law of the People’s Republic of China(IV)(hereinafter referred to as the judicial interpretation of company law(IV)),this part discusses the exertion parties,conditions,periods,methods and particular circumstances.It also sets forth "parity price","transfer price" and other contents that need to be clarified in practice.The forth part introduces the influence of preemptive right of shareholders on equity transfer contract’s validity,including the circumstances that shareholders don’t give up preemptive right and that preemptive right of shareholders are maliciously infringed.The first circumstance is the emphasis,in which the theory that the contract is valid is more reasonable.This part also considers that in the circumstance of article 52 in company law,the contract is invalid,and that in the circumstance of article 54 in company law,the contract is voidable.The fifth part introduces the relief approach when preemptive right of shareholders is infringed,including the object,constitutive requirement,manifestation of infringement,the relief of shareholders and bona assignees.