A Study On The Legal Issues Of Dividing The Spouses’ Common Equity In Limited Liability Companies During Divorce

The divorce dispute involving the division of equity shares covers the fields of marriage law and commercial transaction law,which involves not only the substantive equality within the marital group,but also the legal rights and interests of the limited liability company and other shareholders and third parties.As far as the current legislation is concerned,the direct regulation on the division of common equity in case of divorce exists only in the Interpretation(I)of the Supreme People’s Court on the Application of the “Marriage and Family” Book of the Civil Code of the People’s Republic of China(hereinafter referred to as the Interpretation(I)of the “Marriage and Family” Book).The conditions for the application of this regulation are limited to the case where the husband and wife have reached a consensus through consultation and the type of shareholding of the husband and wife is that one party is the shareholder of the company.The lack of legislative cohesion between the Marriage and Family Law and the Company Law of the People’s Republic of China(hereinafter referred to as “Company Law”)has led to the lack of consensus in the theoretical and practical circles on the trade-off between the rules of family law and commercial law in the legal application of disputes involving the division of equity.As a new type of commercial right with complex comprehensive power,the essential property attribute of equity is the basis of common object.Unless otherwise agreed by the parties,the equity obtained by the husband and wife with common property investment during the duration of the marriage relationship can be regarded as the common property of the husband and wife and divided at the time of divorce due to the common property theory and investment criteria.However,the acquisition of equity does not necessarily mean the acquisition of shareholder status.Due to the personal nature of the limited liability company and the otherness of the equity,the non-holding spouse’s qualification as a shareholder still needs to be restricted by publicitarianism,equity transfer rules and the company’s articles of association in commercial transaction law.France has special provisions on the division of marital divorce equity and its marital property system and the type of company are similar to our country,so there is a visual basis in the comparative law.France is bound by the rules of inheritance in the manner of division.By analogy,we can apply the rules of inheritance of equity,which can be jointly owned by husband and wife and freely transferred within the marital group and whose articles of association could be negotiated.In the case of shareholder conflicts,equity repurchase system can be added to avoid infringement of other shareholders’ rights and interests.In view of the complexity of the equity division in the limited liability company in practice,it is necessary to break through the existing rules to consider the special circumstances of the division of the couple’s equity and combine with the different types of shareholding of husband and wife to make an analysis respectively.The principle should be based on mutual agreement,and when an agreement cannot be reached,the equity should be divided through methods such as transfer of capital contribution,compensation for pricing,and auction division.When dividing,if the company is dissolved or the company form is changed,relevant provisions of the Company Law must be followed,and attention should be paid to protecting creditors.In divorce,the division of the common equity of the husband and wife in the limited liability company should be balanced to protect the interests of all parties.To be more specific,the following points should be done: refine the rules of public disclosure to present a state of shared ownership of equity,maintain the reliance interests of the counterparties,improve the rules of proof to protect the vulnerable position of the non-shareholder spouse,clarify the evaluation plan,time base date to optimize the equity value assessment mechanism as the key to the division of equity,improve the measures of property preservation,improve the right of first refusal of other shareholders,and determine the designation system of third party purchase.The sanctions against one party obstructing the division of equity can make the division of joint equity of husband and wife more reasonable and fair.