Research On The Validity Of Shareholders’ Agreements Of Limited Liability Company

The Company Law of China in 2005 is regarded by scholars as "implementing the spirit of freedom of contract and the concept of corporate autonomy".For limited liability companies,the revised Company Law gives companies more autonomy in the way of "otherwise stipulated in the articles of association".However,under the influence of the real entity theory of legal person,the company is considered as an independent entity.The company’s intention is distinguished from the shareholders’.The shareholders’ intention can only be upgraded to the company’s intention through prescribed procedures.However,due to the small number of shareholders of limited liability companies,the lack of strict separation of ownership and management rights,and the cumbersome procedures for amending the articles of association,in practice,shareholders of limited liability companies often make agreements on shareholders’ rights and obligations,the distribution of power within the company,and management matters.Although the current Company Law allows shareholders of limited liability companies to reach agreements with all shareholders on the distribution of profits,preferential subscription of capital contributions and the notice period of shareholders’ meetings to exclude the application of the Company Law,in practice,the contents agreed in shareholders’ agreements are far more than the foregoing provisions of the Company Law.There are doubts as to whether such shareholders’ agreements can bind the company.At the same time,the issue of conflicts between shareholders’ agreements,resolutions of shareholders’ meeting and the articles of association has not been well resolved in practice.In addition to the introduction and conclusion,this dissertation is divided into three chapters:The first chapter mainly introduces the basic theory of shareholders’ agreements.Firstly,it clarifies that the shareholders’ agreements discussed in this article refer to agreements reached by shareholders of a limited liability company(including the promoters and those who will become shareholders through capital increase or equity transfer)on matters such as internal governance of the company and shareholders’ rights and obligations,and clarifies that shareholders’ agreements are contracts in nature.Secondly,it introduces the judicial practice and relevant legislation of the shareholders’ agreements system in the United States and Britain,providing a useful reference for the study.The second chapter demonstrates the view that shareholders’ agreements agreed by all shareholders can bind the company.Firstly,it sorts out the different viewpoints of judicial practice and scholars on this issue.As to whether shareholders’ agreements are valid in the context of organization law,there are two views in judicial practice and academic circles: affirmative view and negative view.Secondly,this section responds to the negative view from four perspectives: the response to the controversy of the company contract theory,the connection between shareholders’ intention and corporate intention,the need of the protection of minority shareholders and the balance between the consensus rule for shareholders’ agreements and the principle of efficiency.The third chapter mainly discusses the effectiveness conflict between shareholders’ agreements agreed by all shareholders and organizational rules.The prerequisite for the effectiveness conflict between shareholders’ agreements and resolutions of the shareholders’ meeting is that the matters agreed upon by both parties involve the internal governance of the company.To resolve the aforementioned conflict issues,two rules need to be followed: one is to follow shareholders’ true intentions,and the other is that unless minority shareholders abuse their veto power,a resolution of shareholders’ meeting unanimously passed by all shareholders can modify the previous shareholders’ agreements.Regarding the effectiveness conflict between shareholders’ agreements signed by all shareholders and the articles of association,when shareholders’ agreements provide for matters not specified in the articles of association or the articles of association have provided for certain matters,but shareholders’ agreements also provide for restrictive provisions on such matters,there is no conflict between them,and shareholders’ agreements can be viewed as supplements to the articles of association.In addition to the above,the treatment of the effectiveness conflict between them is the same as the treatment of the effectiveness conflict between shareholders’ agreements and resolutions of the shareholders’ meeting.