On Judicial Dissolution Of Company

Deadlock of corporate management and abuse of shareholder' s rights by controlling shareholders are unavoidable phenomenon in the operation of modern company. When the problems arise, company law scholars, lawmakers and judges face an important task of providing legal remedies for deadlock of corporate management and protection of minority shareholders' interests. In China, both scholars and judges have long been hesitant to intervene in shareholder disputes on the grounds that judicial intervention could easily become judicial infringement of internal affairs of company. Article 183 of Company Law, which was amended in 2005, sets out "where a company meets any serious difficulty during its operation or management so that the interests of the shareholders will be subject to heavy loss if it continues to exist and it cannot be solved by any other means, the shareholders who hold ten percent or more of the voting rights of all the shareholders of the company may plead the people's court to dissolve the company" This article fills the vacuum in legislation governing Deadlock of corporate management and abuse of shareholder' s rights by controlling shareholders and opens the door for cases relating to deadlock of corporate management. The court, however, is faced with a daunting task of dealing with these cases due to the fact that Company Law was amended just a short time ago, rules of judicial dissolution of company have some loopholes, and relevant procedural rules are lacking. The legal rules of judicial dissolution of company still fall short in China. Lawsuits of judicial dissolution have been deemed formidable in the civil and commercial court. To solve the problems, the author tries to make a comparative legal study through investigating the experiences of legislation and judicial practice in other countries, and combining theory with reality. This article focuses on the analysis of solving the deadlock of company through dissolution and abuse of shareholder' s rights by controlling shareholders in the hope that it helps China with the development and improvement of rules of judicial dissolution of company. The article has three chapters. Chapter One gives the general discussion about judicial dissolution of company. The first section in this chapter deals with the concept and origin of judicial dissolution of company and its legislative sources. The second section starts with legislation and judicial practice of judicial dissolution of company in foreign countries. The purpose of judicial dissolution of company is to solve the deadlock of company and abuse of shareholder' s rights by controlling shareholders. Through comparing the concept of deadlock of corporate management and abuse of shareholder' s rights by shareholders, similarities and differences have been identified. The article arguesthat judicial dissolution of company serves as the fundamental way of solving deadlock of corporate management and abuse of shareholder' s rights by shareholders. But dissolution should have different required conditions and application standards in these two situations due to the existing differences. The section is the main part of Chapter One. The third section moves forward to the value and significance of judicial dissolution of company. Chapter two starts with the practice of judicial dissolution of company in China. Many pressing problems in judicial practice have been covered and how to solve these problems have been discussed. These problems include the way and scope of judicial intervention in company deadlock, application standard of judicial dissolution, alternative methods, procedure for judicial dissolution and relevant liquidation issues. Chapter Three puts forward the suggestions on improving current law of judicial dissolution. The new ideas raised in this article include the following points: judicial dissolution of company should be deemed the fundamental way of solving deadlock of corporate management and abuse of shareholder' s rights by shareholders, dissolution should have different required conditions and application standards in these two situations due to the existing differences, and some thoughts and suggestions on judicial dissolution rules and judicial practice. Conclusion comes at the end of this article.