A Study On The Application Of Judicial Dissolution System In China

In the course of a company’s operation,conflicts between different stakeholders may lead to the failure of the company’s operating mechanism,and the company’s shareholders may file a lawsuit to dissolve the company.Article 182 of the Company Law of the People’s Republic of China(hereinafter referred to as the "Company Law")stipulates the judicial dissolution system of companies,but the expression of this provision is relatively general,which is easy to cause ambiguity,resulting in different judgments of different courts which often use diverse evaluation standards.The promulgation of the Provisions(II)on Several Issues Concerning the Application of the Company Law of the People’s Republic of China(hereinafter referred to as the Interpretation(II)of the Company Law)has refined the requirements of the judicial dissolution system,but it is still insufficient for complex judicial practice.For example,what are the core criteria for determining "serious difficulties in business management" ? Is "unsolvable by other means" a formal or substantive element? Does "damage to shareholders’ interests" mean all shareholders or plaintiff shareholders?Focusing on these questions,the article will be studying through the method of case analysis.After searching and studying the cases,this paper finds that most judicial dissolution disputes occur in limited liability companies with complex interpersonal relationship and small scale,and there is a correlation between the scale and profitability of the company and the probability of judicial dissolution.One of the reasons why the judicial dissolution system is difficult to play its due role is that many courts use whether the shareholders’ meeting can be convened or whether a valid shareholders’ meeting resolution can be formed as the criterion when judging whether there exists difficulty in business management.The judicial dissolution system should establish a standard with "interpersonal dilemmas" as the core judgment standard of "serious difficulties in business and management".Under this standard,the circumstance of "shareholder oppression",which is widespread in practice but not fully reflected in legislation,can also be included as part of the criteria.In this case,"shareholder oppression" and "corporate deadlock" could both be regarded as the causes of judicial dissolution,and a dualistic criteria structure used for judging judicial dissolutions can be established.In addition,expanding the applicable scope of "abuse of shareholders’ rights" in Article 20 of the Company Law can not only relieve minority shareholders who have been persecuted by major shareholders by taking advantage of their controlling position but also punish shareholders who maliciously file judicial dissolution lawsuits.Meanwhile,establishing a compulsory equity transfer system and improving the mediation system can more effectively protect the interests of minority shareholders.