Study On The Validity Of Shareholders’ Agreements Violating The Articles Of Association In Limited Liability Companies

In the daily governance of limited liability companies,the governance structure and management model must be adjusted in accordance with market changes,and the adoption of efficient and flexible governance tools can better help the company face market challenges.Historically,company charters have provided standardized guidance for company operations,significantly reducing the transaction costs before the company’s operations.However,sometimes the rigid statutory corporate governance structure and the phenomenon of "format charter" greatly increase the post-governance cost of the company,which is at odds with the company’s need to reduce costs and increase flexibility.Shareholder agreements play a crucial role in shareholder equalization,protection of small and medium shareholders,maintaining the human nature of limited liability companies,changing governance structures,and adjusting the risk distribution pattern.Shareholders often realize special agreements concerning the company through shareholder agreements.Thus,shareholder agreements have become an important governance tool for limited liability companies seeking to break deadlocks,to some extent replacing the company charter,and even creating a phenomenon where agreements replace corporate governance.Although shareholder agreements possess all the attributes of a contract,their legal effect within limited liability companies is far from a mere contractual issue;on the contrary,since they intend to change the operation of corporate power,they inevitably interact or even conflict with company charters.Therefore,it is necessary to combine organizational legal principles and theories to grant them fair and appropriate legal effectiveness.Through this article,the author hopes to provide some solutions to this issue.Firstly,the author conducts a theoretical analysis of shareholder agreements,discussing their legal nature as having both contractual properties and organizational law functions,and introduces the important theoretical support for the development of shareholder agreements-the company contract theory.Additionally,the article analyzes the differences between shareholder agreements and company charters in terms of legal status,the body of formulation,and the method of publicization.Secondly,the paper explores the conflict between shareholder agreements and company charters and analyzes the causes of this phenomenon.In practice,conflicts between shareholder agreements and company charters largely stem from the lack of basis in the "Company Law" for shareholder agreements and the inability of the pre-regulatory company charters to meet the diversified corporate governance needs.Moreover,the author selects a certain number of judicial cases as research samples and describes the common types of shareholder agreements that violate company charters in practice.The conflict types mainly include:(1)conflict between the founder’s agreement and the initial charter;(2)shareholder agreement modifying the governance form stipulated in the charter,special arrangements for rights and obligations of the shareholder meeting,board of directors,and senior management;(3)the agreement modifying the procedural governance stipulated in the charter.These cases can be summarized into the following types of judgments:(1)prioritizing the effectiveness of the company charter;(2)prioritizing the effectiveness of the shareholder agreement;(3)following a "differentiation between internal and external affairs" compromise judgment.A summary of the judgment results reveals that the main factors affecting the effectiveness of the shareholder agreement include the contracting parties of the shareholder agreement,the true intent of the shareholders,and whether the agreements stipulated in the shareholder agreement go beyond the limits of shareholder autonomy.Finally,the author summarizes and analyzes the reasoning part of the judgments and finds that in practice,judges often argue from a single perspective of contract law or company law.However,each single path of judgment has certain limitations.Under the path of judgment in contract law,the court focuses on the contract principles of civil law in examining the effectiveness of shareholder agreements,such as whether the contract subjects are eligible,whether the intention is real,whether there are invalid or revocable contract situations,and emphasizes the contractual relativity of the shareholder agreement,arguing that the agreement cannot bind the non-contracting company.In the path of judgment under company law,it focuses more on whether the content stipulated by the agreement violates the content of the company charter,whether it belongs to the mandatory provisions of the company law,and whether it violates the basic principles of company autonomy.However,at present,both in academia and practice,there is still some flexibility in the identification and application of mandatory provisions in company law.The distinction between mandatory and discretionary provisions is not clear-cut,and overly restricting the content of shareholder agreements significantly reduces their practicality in corporate governance.