Research On The Forfeiture Of Shares

From the perspective of the more substantial and fundamental constituent elements such as the purpose of the regulation,applicable circumstances and legal consequences,Article 17 of Interpretation III of the Company Law can define as the forfeiture of shares,which can compel shareholders to make capital contributions.However,the rule is too rough.As a result,academic circles having differing viewpoints on the precise application of the relevant laws and a high number of alternative decisions in the same case have also appeared in judicial practice.In consequence,the legislation is being restructured.Although Article 51 of the second draft of the revised Company Law,which clearly introduces the forfeiture of shares for the first time,refines the procedures of capital calls and regulate the treatment of forfeiture of shares.However,the scope of application,procedural elements,legal consequences and subject relief still need further improvement.This paper attempts to explore the design of the remedies for forfeiture of shares or similar remedies under the foreign laws from the controversial judicial practice and the reconstruction of this provision,and to realize the localized construction of the rule of forfeiture of shares in China.The first chapter focuses on the characterization of Article 17 of the Company Law Interpretation III.This part first introduces the forfeiture of shares and shareholder delisting in Germany,and demonstrates that they are two independent rules which play different roles under the theory of company law.Then,by comparing the differences in composition between the two kinds of rules,article17 of the Interpretation III of the Company Law is characterized as the forfeiture of shares by contrasting the variations in composition between the two rules.Chapter 2 focuses on the current status of judicial application of Article 17 of the Company Law Interpretation III.Firstly,it drives the selection criteria for these cases,and introduces the general situation analysis of the screened cases.Secondly,statistics on the elements of the decision,including the analysis of the applicable matters,applicable procedures,legal consequences.And finally conclude that the rule is set too rough and brief,so the judiciary has debated the specific application of the relevant rules,and the standards and results of adjudication vary from case to case.The third chapter is a brief analysis on Article 51 of the Second Draft of the Company Law.Firstly,it introduces the legislative evolution of the rule of shareholders’ lapse of power in China.Secondly,it analyzes the development and shortcomings of Article 51 of the Second Draft,which builds the framework of the rule of forfeiture of shares.However,it still has shortcomings such as insufficient scope of application,doubtful reasonableness of procedural elements,obstacles to the legal consequences,and lack of remedies for relevant interest subjects.The fourth chapter is to learn from overseas legislation.This part mainly introduces the analogous rules in other countries,specifically including the shareholder disenfranchisement system in Germany,the purchase of own share in the United States and the share forfeiture system in the United Kingdom.Then it summarizes their relevant provisions,and accumulates valuable experience for the improvement of the shareholder disenfranchisement rules in China.Chapter 5 proposes the improvement path for the aforementioned problems.This part proposes the improvement of the forfeiture of shares in China from four aspects.Firstly,it is suggested that the existing causes of default in China should be appropriately expanded to include capital evasion in the scope of regulation,and the articles of association should be authorized to determine the causes of default.Secondly,in terms of the procedure of default,the shareholders’ meeting is important,and it is suggested that the notice of default should take effect upon arrival.Besides,in terms of legal consequences,the treatment of defaulted equity should be refined,and the regulation of industrial and commercial change registration should be complemented.Last but not least,the remedy for relevant interest subjects should be constructed,and the principle of shareholders equality should be implemented.