Research On The Limitation Of Shareholders’ Rights In The Equity Incentive Of Limited Liability Company

The current company law of the people’s Republic of China(hereinafter referred to as the "company law")was revised and promulgated on October 26,2018,which incorporated "equity incentive" into the formal provisions for the first time,that is,Article 142 of the company law.Since then,the CSRC revised and promulgated the measures for the administration of equity incentive of listed companies on August 15,2018 and the guidelines for the supervision of unlisted public companies No.6-regulatory requirements for equity incentive and employee stock ownership plans(Trial)on August 21,2020.It can be seen that the legislative purpose of the state for regulating the company’s equity incentive system,but whether it is the provisions of the company law or the departmental rules or normative documents issued by the CSRC,the equity incentive subjects it points to are mainly listed companies and non listed public companies,that is,joint stock limited companies,However,there are no special legal norms or legal provisions to guide the "limited liability company".Although the Shanghai Lawyers Association issued the guidelines for lawyers to handle the legal business of equity incentive of non listed companies(2018)on March6,2018,the document is only to provide Shanghai lawyers with reference experience in the legal business of equity incentive of non listed companies,It is not mandatory or normative.With the continuous development of small and medium-sized enterprises,human capital has become one of the main targets of competition among enterprises.Therefore,in order to bind the top talents of enterprises with the company and avoid brain drain,more and more small and medium-sized enterprises begin to implement equity incentive in the initial stage or development stage.Most of these enterprises are limited liability companies.It is precisely because the founding shareholders are worried about the instability of brain drain that they hope to retain talents through equity.Therefore,there is a natural lack of sufficient trust between the incentive shareholders and the founding shareholders,which makes the founding shareholders have a stronger desire to "substantially control the equity held by the incentive shareholders",which eventually evolved into various restrictions on shareholders’ rights.Due to the lack of corresponding legal norms,the legal disputes involving "equity incentive of limited liability company" are increasing in recent years,which intensifies the prominent problem of shareholder repression of limited liability company.Therefore,this paper studies the restriction of shareholders’ rights from the perspective of equity incentive of limited liability company.This article is mainly divided into the following four parts from the structure,the main content of each part is as follows:The first part introduces the judicial status of the equity incentive system of limited liability companies.Through the research and analysis of the "legislative status of the equity incentive system",it summarizes the differences between the equity incentive systems of joint stock limited companies and limited liability companies.The fundamental difference is the different degree of autonomy.Combined with the overall situation of judicial practice cases,on the one hand,the problem of shareholder repression in the implementation of equity incentive in limited liability companies is becoming more and more prominent;On the other hand,"different judgments in the same case" is also common.The second part analyzes and demonstrates the effectiveness of various restrictions on shareholders’ rights in the implementation of equity incentive in limited liability companies.Firstly,according to the difference between shareholders’ self-interest right and common interest right,the restrictive clauses are divided into two categories: one is "restricting shareholders’ self-interest right" and the other is "restricting shareholders’ common interest right".Then subdivide it,and make an in-depth analysis of the effectiveness of the more typical "restricted dividend right clause" and "restricted equity transfer clause" in the restricted self-interest right clause and the more typical "restricted voting right clause" and "restricted right to know clause" in the restricted co benefit right clause in combination with relevant judicial precedents and theoretical research,So as to obtain the corresponding effectiveness judgment method.The third part is the analysis and Research on the "boundary of corporate autonomy".This part is the reflection on the abstract theory extracted from the discussion and analysis of the above two parts.Combined with the content of corporate contract theory and the necessity of mandatory norms of corporate law,this part studies and analyzes the balance boundary between "freedom of corporate contract" and "national compulsion".On the one hand,The company contract should have legitimacy,conform to the principle of fairness and the principle of proportion;On the other hand,legislators should take state coercion as a supplement to the freedom of corporate contract,and the judiciary should avoid abuse of power as much as possible while exercising discretion.On this basis,it leads to specific suggestions on the improvement of the existing legislative rules.The fourth part puts forward suggestions on the improvement of China’s legislation on the basis of the previous research.The improvement suggestions mainly start from the following three aspects: first,clarify the right nature of shareholders’ inherent rights;Second,build a perfect equity repurchase system;Third,establish a preferred stock system.